Directors' & Officers' Liability Insurance
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Product Summary
Directors' and Officers' Liability insurance protects the individual directors and officers from personal financial loss arising out of alleged or actual wrongful acts committed in their capacity as directors and officers. D&O policies are written on a Claims Made coverage form basis. Specialized policy forms are available for not-for-profit organizations, small private companies, and large public companies.
What's Covered?
For private companies and non-profit organizations, coverage is often extended to employees, in addition to the directors and officers. Some insurers offer Employment Practices Liability as an additional coverage section on the D&O policy. Many policies will also cover the corporate entity for claims involving the sale or purchase of the company's securities.
What Isn't Covered?
A D&O policy will not cover exposures more properly covered under other policies, i.e., bodily injury or property damage (covered under General Liability) or Employers' Liability (covered under Workers' Compensation). Dishonest or fraudulent acts committed by the directors or officers are excluded from a D&O policy.
What Affects the Cost of the Policy?
Certain types of industry are more susceptible to D&O claims: telecommunications, healthcare, biotechnology. Large publicly held companies, in any industry, are typically frequent targets. A weak financial condition makes a company a ripe target for a D&O lawsuit.