Principles of Risk Management and Insurance, 13th Edition

Directors and Officers Liability Insurance

Officers and directors of corporations are increasingly being sued by shareholders, employees, retirees, competing firms, government agencies, and other parties because of alleged mismanagement. Directors and officers (D&O) liability insurance provides financial protection for the corporations and its directors and officers if they are sued for mismanagement of the company’s affairs. Most corporations have bylaws that require the company to bear the financial responsibility of indemnifying directors and officers for claims alleging mismanagement. In addition to covering lawsuits against a company’s directors and officers, a D&O policy reimburses the company for its costs of indemnifying directors and ...