Directors’ and Officers’ Insurance (D&O), protects organizations from Derivative Lawsuits, Non-Derivative Lawsuits, and associated legal expenses. Directors and Officers have a personal responsibility in ensuring that the corporation they serve operates within the laws that govern corporate behaviour. Forming a limited liability corporation does not grant immunity to directors and officers from certain liability exposures.
Standard D&O policies provide coverage for the following:
- Defense expense and payments that arise from claims against Directors and/or Officers when the costs cannot be indemnified by the company.
- Company reimbursement coverage. This coverage reimburses the company for the costs of paying claims made against the Directors and/or Officers.
- Provides coverage for claims when the company itself is a defendant in the claim.
Additional D&O Insurance Considerations include:
- Public Policy Exclusions
- Conduct (Fraud & Dishonesty)
- Fines and Penalties
- Underwriting Exclusions
- Major Shareholder Exclusion
- Insured vs. Insured Exclusion
- Pending and Prior Litigation Exclusion
- Securities Claims Exclusions
- Employment Practices Liability
- Contractual Liability
- Additional Clauses
- Cancellation of Policy. Restricts the ability of the insurer to cancel the policy mid-term.
- Entity Security Coverage
- Priority of Payments
- Spousal Liability
- Extended Reporting Period
- Employees as Co-Defendant Coverage
- Defense Costs Allocation