Directors and Officers Liability (D&O)

• Professional Liability for your business? Directors and Officers
• Defense costs and other liabilities
• Protects the business and the individual Directors and Officers

Directors and Officers Liability Insurance is a Professional Liability coverage for the Directors and Officers of a corporation to cover their actions and decisions. D&O insurance not only protects the personal assets of the Directors and Officers but protects the corporation's assets as well.

Directors and Officers Insurance reimburses the corporation for those covered losses for which the corporation has indemnified its Directors and Officers. It also pays covered claims directly against the Directors and Officers. Some new policies are being introduced that include coverage for the corporate entity and/or its employees.

Directors and Officers owe their duties to the corporation, its shareholders and to third parties. Directors owe to their corporation and its shareholders fiduciary duties of diligence, loyalty and obedience.

Individual states have statutes that govern the conduct of Directors and Officers in certain situations. Federal statutes which specifically regulate the conduct and may be the basis of a suit against a Director or Officer may include: Federal Securities Law, Antitrust Laws, Employment Retirement Income Security Act of 1974 (ERISA), the Internal Revenue Code, the Racketeer Influenced and Corrupt Organizations Act (RICO), the Financial Institutions Reform Recovery and Enforcement Act of 1989 (FIRREA), and the Federal Deposit Insurance Corporation Improvement Act (FDICIA).

One of the fastest growing areas of claims is Employment Related. These claims stem from state or federal employment and discrimination statutes. Discrimination claims include: age, sex, race, religion, national origin, pregnancy, equal pay and sexual harassment. Wrongful Termination lawsuits have also increased. Employees may claim: breach of contract, promissory estoppel, bad faith or that their termination is against public policy.

All states allow a corporation to indemnify Directors or Officers for defense costs and other liabilities. Indemnification can be used if the person has acted in good faith and in a manner believed to be in the best interests of the corporation. No states have provided for total immunity for a corporation's Directors and Officers.