Directors and Officers (D&O) liability insurance is a type of liability insurance that protects the personal assets of corporate directors and officers, and their spouses, in the event they are sued for alleged wrongful acts in their capacity as directors or officers of the company. It can also protect the company itself by reimbursing it for defending its directors and officers or for lawsuits it is directly named in. D&O insurance typically covers legal fees, settlements, and financial losses when the insured is held liable. Common allegations covered include breaches of fiduciary duty, errors in judgment, and failure to comply with laws or regulations. D&O insurance applies to anyone who serves as a director or an officer of a for-profit business or nonprofit organization.

D&O policies can take different forms, depending on the nature of the organization and the risks it faces. It’s best to seek out an insurance company with deep experience in this specialized field. The policies are generally purchased by the organization to cover a group of individuals rather than by the individuals themselves. If a company fails to disclose material information or willfully provides inaccurate information, the insurer may avoid payment due to misrepresentation.

D&O insurance is usually purchased by the company itself, even when it is for the sole benefit of directors and officers. Reasons for doing so are many, but commonly would assist a company in attracting and retaining directors. Where a countrys legislation prevents the company from purchasing the insurance, a premium split between the directors and the company is often done, so as to demonstrate that the directors have paid a portion of the premium.

D&O insurance has become closely associated with broader management liability insurance, which covers liabilities of the corporation, as well as the personal liabilities for the directors and officers of the corporation. D&O insurance policies do not cover deliberately fraudulent or criminal actions.

In summary, D&O insurance is a type of liability insurance that protects the personal assets of corporate directors a...