In today’s increasingly complex and litigious business environment, your corporate officers and board of directors – the brains of the company – need protection against personal financial liability arising from their corporate activities.
These people are highly vulnerable to lawsuits by investors, employees, vendors, competitors, customers, regulators and others, alleging misconduct for a wide variety of activities, such as:
- Providing inaccurate or unlawful advice.
- Fraud and malfeasance.
- Misrepresentation of company assets.
- Failure to comply with workplace laws.
- Poor hiring decisions. (A Towers Perrin survey found that 40% of all reported D&O claims involved flawed employment practices.)
Directors & Officers Liability (D&O) Insurance will pick up the tab for legal fees, settlements, and other expenses from such litigation. This gives your officers and directors financial peace of mind in carrying out their corporate activities, and provides a valuable incentive for attracting, and keeping quality people who can help grow your business.
There’s a widespread need for this coverage. One in six company executives (17%) surveyed by Inc. Magazine believe that their business will experience a D&O-related loss within the next year.
These policies usually offer two types of coverage known as “sides.” Side A protects directors and officers from personal financial liability if the company is unable to indemnify them. (For example, during a bankruptcy or dissolution.) Side B coverage reimburses the company if it indemnifies directors and officers. (For example, when shareholders file suit against them.) A third coverage – sometimes known as Side C – comes into play when both the company and individual officers and directors face lawsuits.
To learn more about how D&O Insurance can help minimize the financial risks of litigation for your company and your top people, feel free to get in touch with us at any time.