D&O Insurance - Protecting The Company's AssetsWhen a company is sued, many times the directors or officers are sued right along with the company. This is where D&O Insurance comes into play. D&O insurance is directors and officers liability insurance. It is insurance money payable to the officers ad directors of a corporation, or to the company itself. They cover damages and attorney and court costs in case they are sued for acting wrongfully on behalf of the company. People sue shareholders, customers, competitors and regulators for things like anti-trust or unfair trades all the tie. The new thing is to do away with corporations with officers and directors and change the business over to limited liability partnerships to protect the people in charge. The company itself usually purchases the D&O insurance which helps them to attract and hold onto directors and officers that want longevity with the company. If their bylaws prevent them from doing so, the company will pay a part of the premium to help with the costs. Just because D&O insurance exists does not mean directors and officers can engage in wrongful acts if they are known to be wrong. Anything done intentionally as far as wrongful acts go are not covered by the D&O insurance. In fact, the only thing covered would be officer or director negligence. Claims are getting increasingly larger. Payouts are tremendous. More and more, D&O insurance is becoming a fixture with companies and protecting more than just the officers and directors. Sometimes the insurance covers the company's negligence as well. When a lawsuit is filed, it's usually filed against the wrongdoer, his superiors and the company he worked for. No one files suit against just one person anymore. D&O insurance is often coupled with other coverages. These other coverages are designed to cover the company as well. As the number of lawsuits filed increases and the amount of payouts increases, the need for D&O insurance increases along with all other liability coverage for a company. It is extremely important to any company to make sure that they have competent directors and officers. However, beyond competency is the need for liability coverage that not only protects them from their own negligence and the negligence of their co-workers, but the company from the negligence of it's officers and directors as well. |