What Is Directors & Officers Liability Insurance?

Directors and Officers Liability Insurance (D&O insurance) is a type of insurance policy that provides financial protection to directors and officers of a company in the event that they are sued for alleged wrongful acts committed in the course of their duties.

D&O insurance policies typically cover defence costs and damages that may arise from claims related to alleged breaches of fiduciary duty, negligence, errors and omissions, and other wrongful acts committed by directors and officers. These policies can also provide coverage for claims arising from shareholder lawsuits, regulatory investigations, and other types of legal action.

D&O insurance is important because directors and officers can be held personally liable for their actions or inactions while serving in their positions. This can result in significant financial losses for the individuals as well as for the company as a whole. D&O insurance can help mitigate these risks and provide a layer of protection for directors and officers.

Here are some examples of why a business may need D&O insurance:

• Allegations of mismanagement: If a director or officer is accused of mismanaging the business, D&O insurance can help cover the cost of legal fees and settlements.
• Allegations of financial mismanagement: If a director or officer is accused of financial mismanagement, such as fraud or embezzlement, D&O insurance can help cover the cost of legal fees and settlements.
• Allegations of breach of fiduciary duty: If a director or officer is accused of breaching their fiduciary duty, such as failing to act in the best interest of the company.

It's worth noting that D&O insurance policies can vary significantly in terms of the types of coverage provided, the exclusions and limitations, and the cost of the premiums. As such, it's important for companies and individuals to carefully evaluate their risks and needs and work with an experienced insurance broker to obtain the appropriate coverage. That’s where Armour can help, Armour’s brokers can help you find the best coverage at the best price.

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