Directors & Officers (D&O) insurance is a type of liability insurance that provides financial protection to directors and officers of a company in case they are sued for alleged wrongful acts in their roles as company executives. This insurance coverage helps protect the personal assets of directors and officers by covering legal expenses, settlements, and judgments resulting from lawsuits related to decisions made in their official capacities. D&O insurance is essential for attracting and retaining talented individuals to serve on a company’s board of directors or in executive positions, as it provides a layer of protection against personal liability risks associated with their management decisions.
Directors & Officers (D&O) insurance provides coverage for claims made against directors and officers of a company for alleged wrongful acts in their roles. Some common claims covered by D&O insurance include:
- Breach of fiduciary duty: Allegations that directors or officers failed to act in the best interests of the company or its shareholders.
- Mismanagement: Claims of mismanagement, negligence, or errors in decision-making that result in financial losses for the company.
- Employment practices liability: Claims related to wrongful termination, discrimination, harassment, or other employment-related issues.
- Securities claims: Allegations of misleading statements, omissions, or other violations of securities laws in connection with the company’s stock.
- Shareholder lawsuits: Lawsuits brought by shareholders alleging misrepresentation, fraud, or other misconduct by directors or officers.
D&O insurance helps protect directors and officers from personal financial liability in the event of such claims and can cover legal defense costs, settlements, and judgments.