Directors and Officers: What is D&O Insurance and Why Do I Need It?

Posted on: February 9, 2012 by Larry Neilson

Directors & Officers Insurance Defined: Personal liability insurance that provides general coverage to a firm’s directors, senior executives & officers. Paid usually by the firm, it reimburses the costs resulting from law suits and judgments arising out of poor management decisions, employee dismissals, shareholder grievances, and other such acts committed in good faith. Criminal offenses are not covered under this insurance policy.

4 Clauses of Directors and Officers Insurance:

Side-A (Insuring Clause 1): provides coverage to individual directors and officers when not indemnified by the corporation (as a result of state law or financial capability of the corporation)

Side-B (Insuring Clause 2): provides coverage for the corporation when it indemnifies the directors and officers (corporate reimbursement)

Side-C (Insuring Clause 3): provides coverage to the corporation itself for securities claims brought against it

Side-D (Insuring Clause 4): provides for a $250,000 sublimit for investigative costs coverage related to a shareholder derivative demand

Why You Need Directors and Officers Insurance

  • Protection for your directors and officers who are acting on behalf of the company from lawsuits that can be made by stockholders, employees, clients, etc.
  • Majority of directors and officers demand this coverage before accepting or performing on a job
  • In most cases investors and members of your board of directors will not be willing to risk their personal assets to serve as a director or officer
  • With employment practices suits is one of the largest claims and coverage against these suits is found with Directors & Officers insurance

Your business can face a multitude of risks. But when those risks include legal claims and litigation, it’s your directors and officers who often have the greatest exposure. That’s why our agency offers Florida business directors and officers insurance. It provides much needed protection against the costs of legal defense and indemnity coverage for the business, directors and officers, and employees in suits alleging internal mismanagement.

If your organization is not prepared to absorb the costs of such litigation, then D&O insurance is clearly the better choice.

How Much Risk Can Your Business Absorb?

Only an objective look at your data can help determine what your optimal D&O plan looks like. We partner with you to look objectively at risks, threats and opportunities, and then put together a plan to mitigate the severity and frequency of outside litigation.

We’ll help you model how your daily business decisions impact future D&O exposure, thus enabling you to prepare for risks before they happen . Once you know the risks, you know how to avoid them.

Pre-Planning Is Key. Contact Us Now.

Let Advanced Insurance experienced D&O specialists protect your assets and those of your directors and officers long before threats occur. Call Advanced Insurance today! 800-660-7734

Posted in: D&O Insurance Directors & Officers Insurance

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