Directors and Officers Liability Insurance

Definition:

The Directors and Officers Liability Insurance Policy covers a company’s directors and officers for claims made against them while serving on a board of directors and/or as an officer. Public companies, private companies, for-profit and not for-profit entities can all purchase D&O Insurance. The policy covers claims resulting from managerial decisions that have adverse financial consequences. A few unique features of this policy are that it is usually written on a claims-made basis, it often contains no explicit duty to defend the insured and it excludes bodily injury and property damage.

Important things that you need to know about D&O Insurance:

  • Yes, your private company needs directors and officers liability insurance. Depending on the situation, directors and officers may have a personal liability exposure where their personal assets are at risk in exchange for serving in an executive management capacity or for making discretionary business judgments.

  • There are three parts to a D&O policy: Side A typically pays for directors and officers liability for situations where they are not indemnified by the corporation or organization. Side B provides the company or organization with insurance proceeds after the company has indemnified the director or officer. Side C usually defends the company or organization when it is the defendant in managerial litigation.

  • Some state laws require corporations to provide indemnification for directors and officers when certain types of claims are filed against them. There may not be any statutory protections or immunities for the organization or the individual serving as a director or officer for certain claims.

  • When corporations purchase D&O liability insurance, it makes it easier for them to attract quality “outside” individuals to serve in an executive management capacity.

Swingle, Collins & Associates specializes in Directors and Officers Liability Insurance in Dallas, Southlake, Westlake, Plano, Coppell, Irving, Argyle and the surrounding areas.  The descriptions of Directors and Officers Liability Insurance coverage listed on this website are brief and subject to the provisions, limitations, and exclusions that can only be expressed in your policy and related endorsements. For additional information of how Swingle, Collins & Associates can assist in meeting your coverage needs please contact your dedicated risk manager to discuss the benefits and services of commercial inland marine insurance coverage. The information contained on this page is provided for informational and educational purposes only. It contains general information on insurance issues and may not reflect the most current developments in insurance coverage and is unlikely to apply in all factual scenarios. The information does not include all the terms, coverage, exclusions, limitations or conditions that may be contained in the actual insurance contract language. The policies themselves must be read for those details. Sample policy forms will be made available upon reasonable request.