What Does Directors and Officers Liability Insurance Cover?
Directors and officers liability insurance, often referred to as “D&O” insurance, is designed to protect the personal assets of the company’s leaders and comes into play if they are personally sued for actions taken on behalf of the company. As Miami insurance law attorneys, we are experienced in representing our clients in Directors and Officers Liability Insurance Disputes. Company leaders can be sued for a variety of reasons ranging from allegations of financial mismanagement to negligent business decisions, and are frequent targets when shareholders, customers, vendors, suppliers, employees, creditors and other parties are displeased with the company’s actions. Individual Director and Officer Coverage and Corporate Entity Coverage A typical D&O policy includes several elements (referred to as “sides”). Side A protects a corporation’s directors and officers for loss arising from claims against them when the company cannot indemnify them. Side B reimburses the company when it indemnifies the individuals. Side C, also known as “entity coverage,” eliminates disputes over coverage allocation when both the directors and officers and the insured organization are named as co-defendants in a securities lawsuit. Claims That May Target Company Leadership Business leaders can be held responsible for a company’s failure to comply with regulations and to provide a safe and secure workplace. Additionally, if a company is found liable for losses because of operational failure and mismanagement, directors and officers may be exposed to liability as well. Types of claims include: Shareholder suits over company or stock performance; Creditor or investor suits over mismanagement or […]
