Directors And Officers Liability Insurance
What Does Directors And Officers Liability Insurance Mean?
Directors and officers liability insurance (D&O) is a type of liability insurance that provides coverage for directors and officers in the event of legal actions brought against them. This insurance can pay either the directors and officers themselves or the company, and it typically protects against claims made by customers, competitors, regulators, or business partners.
Insuranceopedia Explains Directors And Officers Liability Insurance
D&O insurance provides protection against management errors or omissions resulting from the decisions and policies of the insured. The coverage may include defense costs and expenses related to criminal, civil, or regulatory investigations.
The nature of D&O claims varies based on the corporation or organization involved. Claims can be brought by shareholders after financial losses, creditors seeking compensation, unsatisfied customers, regulators enforcing compliance, or competitors alleging unfair trade practices. In such cases, D&O insurance offers financial protection to both the directors and officers and the company itself.
Typically, companies purchase D&O liability insurance to benefit their directors and officers. However, it does not cover illegal acts committed with intent.
