directors-and-officers-insurance

Directors and Officers Liability Insurance

The Price of Responsibility

Many experienced executives consider it an honor to serve as advisors to successful and growing companies. Likewise, progressive management teams find the insights and guidance brought by seasoned board members an invaluable aid in that growth.

Unfortunately, today’s business environment creates substantial risk for both directors and officers of companies, both public and private. Recent legislation raises the stakes substantially, including the potential of criminal prosecution. Any officer or director can be held personally liable in an increasing number of situations for breaches of a variety of laws and regulations. Without the proper directors and officers liability insurance, you may face the expense of hiring lawyers and face substantial claims against your personal assets and property.

Identifying the Risks

Today’s directors and officers liability insurance coverage is designed to cover the large contingent liabilities faced for:

  • Legal costs to defend against investigations and lawsuits, such as shareholder or regulatory actions
  • Legal and defense costs to handle trials and settlement negotiations
  • Payment of fines, fees, and settlement costs related to wrongful acts of the company

Almost all companies provide directors and officers a level of protection and indemnification. This includes holding officers harmless for normal operating losses. However, directors and officers liability insurance is purchased to ensure adequate funds are available to fund necessary defense expenses and payments in case of alleged or actual corporate wrongful acts. This insurance normally reimburses a company for what it spends on the behalf of officers and directors.

Directors and officers liability insurance is also important for not-for-profits and such organizations as condo associations, planned unit developments, and community associations. Whether profit or not-for-profit, directors and officers liability insurance will cover such issues as:

  • Fraud
  • Negligence
  • Defamation
  • Breach of contract
  • Unfair trade practices

Often called D&O insurance, directors and officers liability insurance is required for corporations in some states. Directors and officers liability insurance is also required for most public companies. While there is a standard understanding of what directors and officers liability insurance is intended to cover, each company tailors its coverage to specific needs and requirements. Proper directors and officers liability insurance is seen as a necessity to attract and keep the best management talent, especially in industries with more than normal risks.

We’re Here to Help

The professionals at O’Kane & Tegay have extensive experience in working with the leading providers of directors and officers liability insurance. If you’re a business owner, we can assist you in putting together the directors and officers liability insurance coverage needed to attract the best directors and officers to help guide your corporation.

If you currently serve as an officer or director of a business, we can provide input and guidance on the right directors and officers liability insurance coverage and providers to protect your assets and those of your fellow executives. We’ll tailor a plan that fits your specific needs.

Call now to speak with one of the knowledgeable agents in our San Francisco office, at 415-242-8777 about your directors and officers liability insurance. We’ll schedule a review at no cost or obligation to assess your current risks and how best to protect against them.
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