The Protection of Directors and Officers Insurance

Directors and officers liability insurance

Dealing with lawsuits is nobody’s idea of a good time, but in business, it is part of the equation that ultimately leads to profit or loss. Giant corporations make headlines for alleged mismanagement and subsequent lawsuits, but companies of all sizes may be subject to lawsuits. In the first half of 2013, according to NERA Consulting, there have been hundreds of lawsuits against securities companies. When significant amounts of money are lost in investment funds for any reason, people tend to point fingers. That’s why a board of directors and the officers of a company need directors and officers liability insurance.

How General Liability Differs from Professional Liability

All professions should have a certain amount of general liability insurance. This usually covers situations in which someone might get injured, such as in vehicle collisions, or a fall on a public set of stairs. Whether or not the fault is clear, insurance protects the business from the damaging effects of a lawsuit. In an analogous way, directors and officers liability insuranceprotects the management of a firm from alleged mismanagement lawsuits that affect people financially. The injury is to the individual’s bank account.

What Can Directors and Officers Cover?

Directors and officers liability insuranceacts as a crucial buffer against litigation when shareholders or corporate clients blame people who run the company for their legal or financial problems. They want restitution, and directors and officers policies can protect a company and its employees in multiple ways.

  • It protects personal assets
  • It can pay for defense costs on covered claims
  • It offers indemnity of directors and officers as well as employees

Policies to cover directors and officers can be tailored to the needs of a particular company with unique liabilities. Look into this protection today.