An organization’s officers typically include executives and managers, but not all employees. D&O policies cover defense costs and damages due to wrongful act allegations and lawsuits brought against an organization’s directors and officers.

The United States is the world’s biggest Directors & Officers liability market, and the sources of insurance claims on these policies are ever-expanding. The open-ended indemnification terms written into this insurance can help to protect management from unforeseen situations which cause financial harm to others.

Examples of Directors & Officers insurance claims include:


Theft of Trade Secrets

A competitor holds a member of your management team, who is a former member of the competitor’s organization, liable after you’ve allegedly obtained trade secrets illegally.

Misrepresentation

This type of claim may be made when investors feel that they were given information that misled them, and they suffered a loss because of it.

Wrongful Acts

Actions that are performed by managers in the scope of their managerial duties could be deemed “wrongful” by shareholders if those actions ended up resulting in a loss.

Criminal Proceedings

Many D&O insurance policies cover costs for managers generated by criminal proceedings and investigations by regulators or criminal prosecutors. These costs can include defense, judgment, and settlement costs for innocent parties.


D&O isn’t a “get out of jail free” card

Directors & Officers liability does NOT cover intentional illegal acts. Innocent individuals will remain fully covered if they are co-defendants with a colleague who deliberately committed acts like fraud, illegal remuneration, or property damage, to name a few.

Directors & Officers claims are becoming more common

While major publicly traded companies face the most risk when it comes to D&O claims, all kinds of other organizations should be insured as well. D&O claims are becoming more common for both public and private companies, and even nonprofits, and claims regarding management decisions aren’t covered under General Liability.