Directors and Officers insurance specifically provides insurance coverage for a “wrongful act,” such as an actual or alleged error, omission, misleading statement, neglect or breach of duty.
For example, A manufacturer told one of its suppliers to increase inventory because they were expecting a large increase in production. As predicted, demand for the manufacturer’s product grew, but the manufacturer increased its inventory with another vendor. The original supplier successfully sued the manufacturer, alleging they suffered damages as a result of having relied on the manufacturer’s promise.
A Directors and Officers Insurance provides defense costs and indemnity coverage to the entity listed on the policy declarations, which may include the following:
- Coverage for individual directors and officers
- Reimbursement to the organization for a contractual obligation to indemnify directors and officers that serve on the board
- Protection for the organization or entity itself
What additional forms of Directors and Officers insurance are offered?
- Entity coverage
- Payment priority for insured persons
- Severability of the insured as well as severability of the application
- Coverage over time, meaning coverage responds to past, present and future directors and officers
- Pay on behalf clause
- Duty to defend clause
Who can bring in a D&O Lawsuit?
Statistics show that shareholders and employees are the most likely groups to sue private companies. Other parties may include corporations against themselves, and a variety of third parties, such as competitors, creditors and regulatory bodies.
We’re Here to Help
Whether you’re a nonprofit, privately held, or a public company, it is likely that your business can benefit from a D&O policy. Since there is no such thing as a “standard” policy, a professional agent is invaluable when purchasing D&O coverage. We understand your organization and can knowledgeably help design policy language to meet your needs. Call us today to learn more about the appropriate protection for your company against potential directors’ and officers’ liability.
If you have any further questions, contact a Risk Advisor or call 914-357-8444 today!
