D&O policies – when do they apply?

D&O or Directors and Officers Insurance is a type of liability insurance covering directors and officers for claims made against them while serving on a board of directors or as an officer of a company.   In Executive Risks, ignorance isn’t bliss, it’s expensive.  So it pays to know when your D&O insurance policy will and will not apply.

A few examples of D&O claims:

  • Litigation ensues from a firm’s board of directors refusing an offer to buy a company, “wrongfully” in the eyes of some of the organization’s stakeholders.
  • In a high stakes intellectual property battle, allegations are made that executives at the company intentionally infringed on the intellectual assets of another firm causing a lawsuit.
  • A joint venture partner alleges that one’s officers breached their duty of loyalty and duty of care to the joint venture entity resulting in a lawsuit.
  • Lenders allege fraudulent misrepresentation by a company executive on a loan application when the organization is unable to repay the monies lent to it.
  • Regulators allege that the company and some of its officers misled them concerning several of the firm’s business practices and that the company’s directors were negligent in their duty.
  • A highly placed executive charges that he was wrongfully severed from the organization due to the actions of certain directors/officers.
  • Clients or customers allege a pattern and practice of misconduct by an organization and the failure of the board to detect and deter this behavior.
  • The Securities and Exchange Commission charges a company and its senior officers with aiding and abetting another company in artificially pumping up the other company’s sales figures.
  • Price-fixing litigation in which certain executives, along with the firm, are named in the alleged litigation.

There are no standardized D&O policies so it is important that you work with a broker who has experience in understanding and writing this coverage. Contact our office today to discuss your potential exposures.

The Armstrong Company Insurance Consultants are here to help with all of your business and personal insurance needs, including Directors & Officers Liability Insurance. Contact us today or Request a Quote!

The Armstrong Company Insurance Consultants (License #0440075)

Posted on: June 7th, 2016 at 10:06am by Armstrong. Filed under: Directors and Officers Liability Insurance
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