Directors & Officers Liability Insurance

directors & Officers

Directors & Officers (D&O) Liability Insurance

The financial assets of your clients’ organizations and the personal assets of the directors & officers can be at risk with every decision they make.

Directors & Officers (D&O) Liability insurance is designed to protect the people who serve as directors or officers of a company from personal losses if they are sued by the organization’s employees, vendors, customers or other parties. D&O insurance can cover defense costs, settlements and other costs associated with wrongful act allegations and lawsuits. Directors & Officers insurance is an important aspect of a corporate risk management strategy and can help your company attract and retain qualified executives and board members.

All organizations, whether public, private or nonprofit, and the people who lead them, are vulnerable to a multitude of D&O exposures. These exposures may include securities litigation, regulatory actions allegations of misrepresentation and breaches of fiduciary. Travelers helps businesses understand  Directors & Officers Liability coverage.

Directors & Officers liability coverage typically consists of three parts.

Side A covers suits against the individual directors. This portion of the policy provides direct indemnification to the directors and officers for acts for which the corporate organization is not legally required to indemnify the directors and officers or for which it is financially unable to indemnify (which typically occurs when the company is bankrupt).

Side B coverage, known “corporate indemnification,” covers the parent company’s obligation to indemnify the insured directors or officers for claim payments and defense costs associated with wrongful acts committed by the directors or officers while serving the organization.

Side C protects the corporate entity against claims involving its securities (e.g., class action lawsuits alleging that errors and omissions caused the value of a company’s shares of stock to drop in value).

Who is D&O Insurance Right for?

Any business, including private companies, public companies and financial institutions with a board of directors should have Directors & Officers liability insurance coverage. Claims against companies and their directors and officers are increasingly common.

If your business works with vendors or government entities, or has employees or customers, you may have exposure that could make your organization and its executives vulnerable to costly legal action.

Find out more information about Travelers Directors & Officers Liability coverage here.

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