D&O or Directors and Officers Insurance is a type of liability insurance covering directors and officers for claims made against them while serving on a board of directors or as an officer of a company. In Executive Risks, ignorance isn’t bliss, it’s expensive. So it pays to know when your D&O insurance policy will and will not apply.
A few examples of D&O claims:
- Litigation ensues from a firm’s board of directors refusing an offer to buy a company, “wrongfully” in the eyes of some of the organization’s stakeholders.
- In a high stakes intellectual property battle, allegations are made that executives at the company intentionally infringed on the intellectual assets of another firm causing a lawsuit.
- A joint venture partner alleges that one’s officers breached their duty of loyalty and duty of care to the joint venture entity resulting in a lawsuit.
- Lenders allege fraudulent misrepresentation by a company executive on a loan application when the organization is unable to repay the monies lent to it.
- Regulators allege that the company and some of its officers misled them concerning several of the firm’s business practices and that the company’s directors were negligent in their duty.
- A highly placed executive charges that he was wrongfully severed from the organization due to the actions of certain directors/officers.
- Clients or customers allege a pattern and practice of misconduct by an organization and the failure of the board to detect and deter this behavior.
- The Securities and Exchange Commission charges a company and its senior officers with aiding and abetting another company in artificially pumping up the other company’s sales figures.
- Price-fixing litigation in which certain executives, along with the firm, are named in the alleged litigation.
There are no standardized D&O policies so it is important that you work with a broker who has experience in understanding and writing this coverage.
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For more information on D&O Liability Insurance, contact The Armstrong Company Insurance Consultants.
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