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Directors & Officers Liability Insurance

Directors and Officers (D&O) liability insurance is a form of errors and omissions insurance covering the directors and officers of corporations against suits alleging they committed wrongful act(s).

D & O coverage is used to provide for “Wrongful Acts” of a director or officer. An example of a policy definition of wrongful acts is as follows: “Wrongful Act” means:

• actual or alleged error, misstatement, misleading statement, act, omission, neglect, or breach of duty committed by an Insured, individually or otherwise, in their capacity as a director or officer of the Company; or
• matter claimed against an Insured solely in their capacity as such; or
• matter claimed against an Insured arising out of serving as a director, officer, trustee or governor of an Outside Entity and while in such capacity, but only;
  • if such service is at the written request or direction of the Company;
  • if, at the time such service began, the Insured did not know or could not have reasonably foreseen that such matter could lead to a claim under this policy;

As with all policies there are exclusions in the form. Please read your policy for the specifics of your coverage.

Where do the claims come from?

• 48% of Claims are by Third Parties (Creditors, Regulators, Customers, Employees)
• 52% of the claims come from Stockholders

Only D&O covers the Wrongful Acts of the Directors and Officers. Directors and Officers are being held to a higher standard by the legal community, governments, both State and Federal, and Consumerism.

D&O does not cover civil or criminal fines or penalties imposed by law, nor does it cover punitive or exemplary damages, or taxes or matters deemed uninsurable under the law to which this Policy shall be construed.

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