Director’s & Officer’s Liability
Directors & Officers Liability" (D&O Liability) refers to a type of insurance policy designed to protect individuals serving as directors or officers of a company from personal financial losses if they are sued for alleged wrongful acts or omissions while performing their duties, such as mismanagement, poor decision-making, or breach of fiduciary duty; essentially covering them against claims brought by shareholders, employees, creditors, or other parties related to their management decisions.
Key points about D&O Liability:
Who it protects:
Directors and Officers of a company, including members of the board of directors and senior executives.
What it covers:
Legal defense costs, settlements, and other expenses associated with lawsuits arising from alleged errors, misstatements, neglect, or breaches of duty in the course of their management responsibilities.
Common claims:
Shareholder lawsuits, employment-related claims like discrimination or wrongful termination, creditor claims, and claims related to financial misstatements.
Importance of D&O insurance:
Helps attract and retain qualified individuals to serve on boards and in executive positions by providing protection against personal liability.