Some business executives believe that their general liability or umbrella business insurance policies will cover claims involving directors and officers. Not true.<\/p>\n
They also believe that D&O policies are only for some particular companies. Not true, again. A business of any size will usually have officers and possibly directors who can be targeted by litigants over their management of company affairs.<\/p>\n
D&O liability insurance protects company directors and officers in the event they are personally sued \u2014 often in addition to the company being sued \u2014 by investors, employees, vendors, competitors, and customers, among other parties. The insurance protects directors and officers by covering legal fees, settlements, and other costs; in addition, the coverage sometimes can extend to protect the company if it is named in a suit, as well.<\/p>\n
In many cases, when you appoint directors or hire new officers they will demand D&O coverage as a condition of serving or employment because they don\u2019t want to put their personal assets at stake. Sometimes outside investors, such as venture capitalists or other financiers, will require D&O policies before providing funding to your business \u2014 they often see the coverage as a way to protect their investment.<\/p>\n
Directors and officers are sued for a variety of reasons connected with their company positions, including misuse of company funds, misrepresentation of company assets, fraud, failure to comply with workplace laws, and lack of corporate governance among other issues.<\/p>\n
Bankruptcy is one of the leading causes of loss for a business \u2014 and one of the leading causes of D&O lawsuits. A bankruptcy can spark litigation against directors and officers from creditors, lenders, customers, as well as investors. Even if a company doesn\u2019t go bankrupt and just needs to downsize, employee layoffs may still prompt claims personally targeting directors and officers, in addition to the business. When a company needs to do layoffs, some employees might sue because they feel unfairly persecuted. They may claim they were let go because of some form of discrimination.<\/p>\n
Unfortunately, some business executives find out too late why they need D&O insurance. Once they have had a claim, they understand why they need the insurance. It\u2019s really important to have that executive understand before they\u2019re sued where they\u2019re vulnerable and who might sue them.<\/p>\n","protected":false},"excerpt":{"rendered":"
Some business executives believe that their general liability or umbrella business insurance policies will cover claims involving directors and officers. Not true.<\/p>\n","protected":false},"author":9,"featured_media":2600,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-2478","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-9","description-off"],"yoast_head":"\n