Directors, Officers and Company Liability insurance is a policy designed to provide financial protection for the directors, officers, and the corporate entity which they serve in the event that lawsuits alleging mismanagement of the corporation are brought against the directors/officers, either individually or collectively. Since virtually all corporations have bylaws in which the corporate entity, in the vast majority of cases, bears the financial responsibility of indemnifying directors/officers for their alleged misdeeds. A D&O policy is a financial tool through which the corporate entity can be reimbursed for its costs in defending and settling lawsuits against its directors/officers. In certain circumstances, such as bankruptcy or derivative lawsuits, where the corporation cannot indemnify its directors/officers, the D&O policy affords front-line financial protection for the directors/officers.

Directors, Officers and Company Liability insurance provides indemnification on three levels:

a)      First, to the Individual directors, officers, employees or agents not indemnified by their Corporation;

b)      Second, to a Corporation for amounts expended in indemnifying its officers, directors, employees or agents;

c)      And third, to the Corporation itself for losses arising out of defined exposures such as Securities Transactions and Employment Matters.

Although policy protections vary based upon the particular carrier or policy form utilized, most policies are written on a claims made basis and utilize similar structure for limits, retentions and coinsurance. Each policy language contains exclusions particular to the form.