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What is Directors and Officers Insurance


What is Directors & Officers Insurance

What is Directors and Officers Insurance?

Directors and Officers insurance (D&O) is designed to protect a company and its leadership (directors and officers and key executives) against the potential consequences of alleged wrongdoings, such as financial mismanagement, misappropriation of funds, and negligence. A directors and officers policy can pay legal fees, damages, agreed-upon settlements, and some civil penalties. Depending on the policy, you may also get help for investigative costs.

Privately and publicly held companies as well as non-profits and associations can obtain Directors and Officers insurance. The policy you choose will depend on your bylaws and your organizational structure. In general, it can include:

  • Side A Coverage: Protects the personal assets of directors and officers from liabilities that are “not indemnified” by the corporation.
  • Side B Coverage: Provides insurance to the corporation when the corporation is required, in accordance with its articles of incorporation, by-laws or other agreement, to indemnify its directors and officers for claims made against them
  • Side C Coverage: Protection for the company itself when it is listed as a defendant in a claim

There may be serious limitations in coverage, such as discrimination exclusions and employee dishonesty exclusions, among others. What’s more, there are many ways to structure directors and officers coverage. The best option is to build out a comprehensive plan of protection that dovetails with your management and professional liability insurance.

Furthermore, General Liability and Umbrella policies typically don’t provide coverage for management liability losses so the assets of your company and key individuals will not be protected in Directors & Officers types of situations.

As professional liability experts, Axis can go over Directors & Officers coverage in detail with you and explain the forms available and what will make most sense for your company or entity. Coverage is available for: public companies, private companies, non-profits, educators, public officials, financial institutions and other general businesses. Please give us a call at: (877) 787-5258.

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Blogged on: November 6, 2012 by Mike Smith
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