Being a corporate CEO or sitting on a board of directors may sound like a desirable job, given the generous salary and position of authority, but even these positions aren’t free from liability concerns. Those who sit in the corner offices have to worry about being sued by unhappy clients, vendors, employees, competitors, investors, and customers. Claims can arise that contain actual or alleged wrongful acts, and which specifically name directors and officers as the culpable party. A D&O liability insurance policy can be used to protect the personal assets of the individuals filling the D&O roles.
Areas of Impact
As mentioned by https://www.sboneinsurance.com, a D&O policy usually helps the company and the individuals with the costs of attorney fees, court settlements, and overall court costs. Although some directors and officers already have a standard indemnification provision covering their positions, both policies are necessary to fill in any gaps. The primary suits brought against directors and officers include:
- Financial loss or bankruptcy as a result of a breach in fiduciary duties
- Misrepresenting company assets
- Misuse of company finances or funds
- Failure to obey the workplace or code of conduct contracts
- Theft of intellectual property
- Failure to provide corporate governance
- Poaching a competitor’s clients
Illegal activities are not usually covered by directors and officer’s policy. Check with your provider for other potential exclusions.