Directors and officers insurance, also known as D&O insurance, is a type of insurance policy designed to protect the personal assets of directors and officers of a company from claims made against them. It is an important form of protection for those in leadership positions, as they can be held personally liable for any decisions they make that result in financial losses or other damages to the company.
D&O insurance is designed to cover the costs associated with defending against claims made against directors and officers, as well as any damages that may be awarded in the event of a successful claim. It is important to note that D&O insurance does not cover any intentional or criminal acts, and it is not a substitute for good corporate governance.
When considering D&O insurance, it is important to understand the different types of coverage available. Generally, there are three main types of coverage: entity coverage, which covers the company itself; individual coverage, which covers the directors and officers; and entity and individual coverage, which covers both the company and the directors and officers.
It is also important to understand the different types of claims that D&O insurance can cover. Generally, these include claims related to wrongful acts, such as mismanagement, breach of fiduciary duty, and negligence. Additionally, D&O insurance can cover claims related to securities fraud, employment practices, and intellectual property.
When selecting a D&O insurance policy, it is important to consider the company’s specific needs and the type of coverage that is most appropriate. It is also important to understand the exclusions and limitations of the policy, as well as the cost of the coverage.
Overall, D&O insurance is an important form of protection for directors and officers of a company. It can help protect their personal assets from claims made against them, and it can help cover the costs associated with defending against such claims. By understanding the different types of coverage available and the types of claims that can be covered, companies can ensure that they have the right level of protection in place.