Directors and Officers Liability Insurance is a type of errors and omissions insurance designed to protect directors and officers from lawsuits filed to compensate for unfavorable financial consequences. It is geared to reduce the severity of director and officer personal litigation risks against public, private, and non-profit companies.
Protects Directors and Officers Against Lawsuits
The Sarbanes-Oxley Act was enacted to protect investors by enhancing the accuracy and reliability of corporate disclosures in compliance with security laws. Directors and Officers Liability Insurance provides protection against possible lawsuits related to employee and shareholder demands as well as parties incidentally involved. It protects directors and officers for losses occurring due to their role in the company. It may also assist businesses in reimbursement of legal fees or other costs.
Directors and officer should protect themselves from claims arising from improper performance of their duties. As the corporation’s fiduciaries, they are entrusted with the obligation to perform their responsibilities for the benefit and interest of the corporation. Negligence with regard to such duties may cause damage to those entrusted with those obligations. Because stockholders cannot be held responsible in such instances, personal liability may be applied in instances of breach of fiduciary duties.
Some damaging events that result in lawsuits against Directors and Officers may include:
- Fraud
- Misapplication of company funds
- Theft of intellectual property
- Taking advantage of competitors’ customers
- Lack of appropriate corporate management
- Failure to comply with workplace laws
- Misrepresentation of company assets
It is important to determine the areas of coverage needed in order to establish affordable and precise coverage. E&Y Insurance Agency can help you determine the various situations whereby protection can be considered and which policy might fit best. Policies generally protect a group of individuals as opposed to individuals themselves. Exclusions for fraud, criminal activity, and illegal profits are usually made.
Let us help you compare the different Directors and Officers Liability Insurance polices.
Call us today at 248-362-1313 or fill out the contact form below.
