Directors & Officers

What is D&O Liability Coverage?

D&O is written to:

  • Protect the personal assets of a company's directors and officers
  • Protect the company's assets
  • Provide reimbursement to the organization to indemnify D&O's for their losses
  • and
  • Help the company monitor and provide defense costs associated with responding to lawsuits and investigations.

Why Private Companies Should Consider Buying D&O Liability Coverage?

Cost of defending corporate lawsuits may exceed the net worth of most private companies:

  • Corporate indemnification may not be available
  • Judgments can be financially crippling
  • Adverse shareholders and other potential claimants may exist
  • Bad business decisions are likely to be more visible due to small business environment thus attracting the attention of shareholders, regulators and others
  • Business decisions made by D&O's can quickly impact the finances and operations of a company
  • D&O's work in demanding environments as they cover more corporate duties
  • Unique conflicts of interest may exist due to complexity of responsibilities
  • and
  • Companies will have a difficult time attracting qualified individuals to their Boards without D&O coverage.

Current Business Trends Point to Purchasing D&O Coverage:

Protection Against Economic uncertainty:

  • Access to adequate capital
  • Keeping up with technology
  • Internet growth
  • Protecting intellectual property assets
  • Retaining qualified workers.

What are the Sources of D&O Claims?

Shareholders, Investors, Partners and Members:
Merger / Acquisitions Conflict of interest
Financial performance Bankruptcy
Executive compensation Inadequate / Inaccurate disclosure
Stock or other offerings Financial reporting
Customers, clients and consumer groups:
Extension, refusal of credit Restraint of trade
Debt collection Dishonesty
Deceptive trade practices Cost, quality of product or service
Contract dispute Lender liability
Other third party claims against Directors and Officers (including competitors)
Anti-trust Prospective company acquisition
Copyright / patent infringement Company defamation
Business interference Tax issues
Competitor disputes Regulatory / other government issues

 

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