Public Company Building

Three Coverage Clauses of Directors and Officers Insurance

Over half of all publicly traded companies experience lawsuits by shareholders. Because of the position of influence and responsibility that directors and officers for public companies find themselves in, they are usually the first to be charged for alleged wrongful acts.

Directors and Officers Liability Insurance, also known as D&O insurance, is a form of liability insurance that protects those at the head of a company in the event that those individuals suffer losses as a result of legal action. It can also provide defense costs in the case of a criminal investigation or trial. D&O Insurance for public companies includes the following three insuring clauses that protect the directors and officers as well as their companies:

1. Side-A

This type of coverage is extended to individual directors and officers that are not indemnified by their corporation. This may be a result of state law or the corporation’s inability to pay.

2. Side-B

Corporations that indemnify their directors and officers in the form of corporate reimbursement are covered in this clause.

3. Side-C

This type of coverage is provided to the corporation itself when securities claims are brought against it.

Who is Eligible?

Publicly traded companies may be eligible for D&O Insurance if they meet specific criteria, including having a revenue of at least 500 thousand dollars and having three or more practitioners. For more information on protecting directors and officers for public companies, contact a reputable liability insurance company today.


photo credit: kevin dooley cc