Directors and officers insurance provides protection for insured directors and officers as well as the corporate entity itself. The corporation is protected because D&O insurance covers corporate indemnification and expense advances. The directors and officers are protected by the insurance coverage when a corporation is unwilling or unable to indemnify directors and officers.

Besides liability protection for directors, officers, and the corporation, D&O insurance may be useful on many other levels. For example:

  • Investors may require such insurance as a condition for funding
  • Directors and officers may require such protection before serving

What Is Covered by D&O Insurance?

Here are several things that may be covered by D&O Insurance:

  • Employment practices liability (i.e., employment related lawsuits)
  • Fiduciary liability (i.e., liability resulting from fiduciary duty violations)
  • Stockholders’ and clients’ claims against corporation, directors, and officers

What Is Not Usually Include in the Insurance Coverage?

D&O insurance coverage is a complex matter and may have various exclusions, such as:

  • Conditions already in place when applying for coverage
  • Conduct for which indemnification is prohibited by state law
  • Fraud and criminal fines
  • Punitive damages

However, note that even as to covered conditions, insurance companies may assert a defense when a controversy actually arises.

Seeking an Attorney’s Help

Issues involving D&O insurance can be highly complex. A qualified business attorney can help you obtain D&O insurance and analyze specific claims that fall within the coverage.