In the last 10 years or so, directors and officers of companies have been operating under increasing scrutiny. Various high profile scandals, from Kenneth Lay of Enron to Martha Stewart’s ignominious insider trading and an enhance level of governmental regulation have shifted directors and officers from faceless top executives working behind the scenes, to front page news. As a result, D&O liability has become a top concern for executives.
Corporate by-laws and/or indemnification agreements do not provide absolute protection to directors of a company. As a result, D&O insurance is an important component in any comprehensive protection plan. However, in the D&O marketplace the terms, conditions and coverages vary widely depending on the insurers.
In general, D&O coverage should cover three main areas. 1) The individual director’s and officer’s personal assets. 2) Reimbursement to the business for costs of claims against directors and officers when the company indemnifies them. 3) Protection for the company itself when it is listed as a defendant in a claim.
Many small business executives think they don’t need D&O coverage, that is exclusively the territory for large, publicly traded companies. But although private businesses don’t risk exposure to securities class action suits, a business doesn’t have to have shareholders in order for its directors and officers to be personally sued. Various industries may require more specific types of coverage: nonprofit, public, private, educators, public officials, and financial institutions will all require tailored specialized D&O coverage.
At PLRisk Advisors, we have the experience, knowledge, markets to secure the policies your clients require. We can help secure Directors and Officers insurance (D&O) to protect them and their companies in the event there is an allegation that they have failed to perform their duties.
To learn more about our D&O policy features, review our eligibility, highlights, and target exposures for each type of entity. For more detailed information, please contact us today (855) 403-5982.