Directors and Officers Liability Insurance (D&O Insurance) is a type of coverage that protects directors and officers of a company from financial losses resulting from claims made against them for alleged wrongful acts committed in their roles as corporate leaders. The policy typically covers defense costs, settlements, and damages awarded in lawsuits, subject to the policy's terms and conditions.
D&O Insurance primarily focuses on protecting directors and officers against claims related to managerial decisions, fiduciary duty breaches, errors or omissions, misstatements, and other wrongful acts committed while acting within their official capacities. These policies generally provide coverage for claims made by shareholders, employees, regulatory agencies, creditors, customers, or other third parties.
The insurance helps to safeguard directors and officers against personal liability, as it is not uncommon for individuals in executive positions to face legal action due to alleged negligence, mismanagement, conflicts of interest, or breaches of duty. Furthermore, D&O Insurance can act as a powerful recruitment and retention tool for attracting qualified individuals to serve in management roles within organizations, as it shows a level of financial protection in case of litigation.
It is important to note that D&O Insurance typically does not cover intentional illegal acts, fraud, bodily injury, property damage, or other general liability claims. Policy terms, limits, and exclusions can vary depending on the insurance provider and the specific policy purchased. As such, organizations and individuals should carefully review the terms and conditions of the policy to understand the scope of coverage and any potential limitations.
