► For-Profit D&O Liability Insurance

At Alexander J. Wayne & Associates we can work with insurance agents and their clients to PROPERLY insure director and officer exposures.Today’s directors and officers of “for-profit” companies face potential lawsuits from a multitude of sources. Whether they work for a large public company or a closely held private firm, directors and officers are brought into lawsuits that threaten their personal assets. Directors and officers can be sued by shareholders, employees, customers, competitors and the government.

The types of alleged “wrongful acts”, for which directors and officers are sued include; breach of fiduciary duty, neglect, errors, omissions, misleading statements, misstatements, etc. These “wrongful acts” are essentially mistakes made by individuals arising out of their capacity as directors or officers. For example, mismanagement or improper information disclosure under the SEC’s Regulation Fair Disclosure might be the basis for a lawsuit from stockholders whose investment shrunk after a company’s stock price drops.

Even cases where the directors and officers are not at fault for the alleged “wrongful act”, the cost of defense alone can amount to millions of dollars. If the exposure is not properly covered, it can leave a company and its individual directors and officers in financial ruin!

The original purpose of D&O coverage was to insure the individual directors and officers , with a provision to reimburse the entity for loss which it pays as indemnification to the individual directors and officers. Today, there are provisions to protect the entity itself when it is named in the lawsuit. Policies covering privately held companies can include employment practices liability coverage. In some cases, the insurance markets will offer a retention rebate if a defendant is dismissed from a verdict in a securities claim. It is also possible to get the definition of “Insured” and “Wrongful Act” significantly broader than in the past.

At Alexander J. Wayne & Associates we can work with insurance agents and their clients to PROPERLY insure director and officer exposures.

For more information, please do not hesitate to call one of our experienced staff members.