Among the least understood insurance products is D&O insurance
, also known as Directors & Officers insurance. Even some attorneys struggle to comprehend the coverage offered to managers. The core purpose is to implement financial security for managers against the consequences of real or alleged wrongful actions when managing within the range of their duties.
Features and Highlights
Clarifying the unique features and highlights of D&O insurance is necessary for understanding why it exists for directors and officers of your corporation. Some of the highlights include:
- Policies are written on a claims-made basis
- It covers defense costs and damages, settlements and awards
- It usually contains no explicit duty to defend the insureds
- It covers monetary damages excluding bodily injury and property damage
Your company needs to ensure that its directors and officers have leeway to make decisions. D&O insurance encourages sound corporate governance by making the risks of those decisions transparent and manageable.
The Importance of Coverage
No matter how prudently they act, a manager's judgment can result in significant losses for your company. The directors and officers who made those decisions can be held personally liable for the damages and can be involved in costly litigation.
When you trust an experienced Directors and Officers insurance professional, you protect your assets and those of all current, past and future directors and officers of your company prior to a threat occurring.