When individuals, other corporations, competitors, Federal regulators, stockholders and others sue a company, they also often sue the primary directors and officers. It is estimated that 80 percent of liability suits aimed at a specific company director will also name the company itself in the suit along with other executives.
Directors and officers insurance has been around for over 50 years but there is a wide variation in coverage levels. When reviewing your D&O policy options and planning personalized coverage for your company, it is important to look at all options available. Two coverage plans can provide very different levels of coverage despite being similar in price.
Go through the fine points with your commercial insurance agent and make sure you are getting all of the different levels of protection you need on your D&O policy.
Make sure to also review what is specifically excluded in the policy. For example, many D&O policies will not provide coverage for specific fraud and criminal acts. The policy may not cover lawsuits involving property damage, bodily injury, or pollution discharge.
Your company cannot grow without this critical commercial insurance coverage. In today’s world of increased litigation, most investors and venture capitalists will not work with your company until you are protected by a solid D&O insurance policy. You will also find that you are unable to attract skilled executives to the top positions without D&O coverage, because the directors and officers can be held personally liable for acts made by the company.