Directors’ & Officers’ Professional Liability Insurance

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There was a time when your pursuit of the American dream and your business obligations were two very different things and the pieces of the puzzle were easy to connect. No more.

In today’s increasingly complex economic environment, the consequences of any given business decision can cross the line and put a decision maker’s personal assets at risk. Corporate/association directors and officers are routinely named in litigation arising from a variety of situations. Providing protection for many of these exposures is our business.

You may have considered buying Directors’ and Officers’ Liability Insurance (D&O) for your association/company, but thought the coverages too restrictive, the price too high and the likelihood of a lawsuit too remote. Think again.

Our specifically tailored D&O policy provides professional liability protection for the organization’s directors, officers, board members, trustees, paid staff, and
volunteers. This program has been developed to address a wide variety of exposures, including Employment Practices Liability, with preferred rates and retentions for non-publicly traded companies.

SOURCES OF D&O CLAIMS

42%- SHAREHOLDERS, INVESTORS, PARTNERS AND MEMBERS

  • Merger/acquisition disputes
  • Financial performance/bankruptcy
  • Executive compensation
  • Stock or other public offering
  • Conflict of interest
  • Investment or loan decision
  • Inadequate/inaccurate disclosure
  • Financial reporting

32%- EMPLOYEES OR FORMER EMPLOYEES (EPL)

  • Wrongful termination
  • Breach of contract
  • Pension, welfare, benefit dispute
  • Harassment/humiliation
  • Discrimination
  • Defamation
  • Union dispute

14%- CUSTOMERS, CLIENTS AND CONSUMER GROUPS

  • Extension/refusal of credit
  • Debt collection
  • Deceptive trade practices
  • Contract dispute
  • Restraint of trade
  • Dishonesty/fraud
  • Cost/quality of product/service

12%- OTHER THIRD PARTY CLAIMANTS

  • Antitrust
  • Copyright/patent infringement
  • Product/company defamation
  • Business interference
  • Competitor disputes
  • Environmental
  • Prospective acquisition of your company
  • Civil rights
  • Dishonesty/fraud
  • Tax issues
  • Other governmental issues

AS YOU CAN SEE, more than half of all lawsuits come from areas outside of traditional shareholder litigation. Furthermore, the list only covers known D&O cases. Who knows what other issues may be raised in the future or what changes your organization may go through, which may give rise to litigation. Directors’ & Officers’ Liability Insurance will help mitigate these unknown exposures.

Source:
1998 Tillinghast-Towers Perrin D&O Liability Survey

WHY DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE?

Actions brought against directors and officers based upon actual or alleged wrongful acts arising from the execution of their day-to-day duties and management functions can result in a D&O claim. D&O liability insurance protects the personal assets of directors and officers from catastrophic financial loss in the event of such a claim. The D&O policy also provides coverage for the organization when entity coverage is included.

It’s becoming more common for directors to require that a company purchase D&O liability insurance before they serve on its board. It is easy to understand why. Litigation expenses alone can amount to millions of dollars. D&O coverage can help protect the directors and officers from personal financial loss relating to these expenses.

This is not a legal document, but a brief description of the coverage offered. Nothing contained herein will alter or waive any of the items or conditions of any policy which is issued. In the event of a conflict, the terms of the actual policy will prevail.

For more information, please contact us.