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Directors & Officers Insurance: Not Just for the Big Boys

It’s the large public companies that make headline news as targets of litigation by stakeholders because of alleged wrongdoings, such as financial mismanagement, misappropriation of funds, and negligence. But a recent article in Business Insurance reported that middle-market and smaller firms are also frequent targets of such lawsuits.

According to NERA Economic Consulting, about 160 securities lawsuits have been filed against publicly traded companies in the first half of this year, with more of the same expected in the second half. This trend, according to the article, doesn’t just affect publicly traded middle-market companies but also closely held private companies “who may forget that they have exposures beyond shareholders”, such as family members with disputes that can be difficult to resolve.

What’s more, middle-market companies involved in mergers or acquisitions become engaged in litigation filed by shareholders worried that they may be paying too much or getting too little out of the deal. It doesn’t matter if the allegations are baseless. The cost to defend against them can be very costly for a company and even bankrupt it.

This is why Directors & Officers coverage is so necessary. It protects your business, you, and your directors and officers against claims related to performance of your duties. Think of it as management errors or omissions coverage. Policies can be tailored to individual situations. Liability insurance and defense costs for covered claims are included, with other added features available such as expert counsel to manage a defense.

Axis Insurance is happy to discuss your firm’s need for Directors & Officers insurance and how it can serve to help protect your assets. 

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Blogged on: September 30, 2011 by Mike Smith
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