Directors & Officers Liability: Something to Consider

By Ashley Western, ACSR, MSM RMI
Commercial Business Development Manager

In this economy, Directors and Officers Liability insurance should be a major component of corporate executive protection.  As many as 95% of Fortune 500 Companies purchase D&O Insurance today.  Studies indicate that the average settlement of securities fraud litigation in 1999 was greater than $8 Million, with average defense costs exceeding $1 Million.(FindLaw.com, 2009)  10 years later, than number has increased steadily.  Considering that sizable statistic, along with the added exposure that directors & officers face when being scrutinized due to the bad economy, Directors  & Officers coverage is something every executive with stockholders needs to consider.

So what does D&O Protection afford?  D&O provides protection to directors & officers from liability arising from actions connected to their role as corporate decision makers.  It covers financial liability claims against a company’s officers & directors.  Most D&O policies for large businesses cover financial & securities related claims, but a smaller version has come out, which combines D&O liability with Employment Practices Liability, Crime, Kidnap & Ransom, and Fiduciary Liability.  Most carriers call this their “Executive Protection Package” .  Regardless of what size the business is, the reality is that most businesses have these exposures, and they can be mitigated with relatively inexpensive insurance protection.

Any size business has an exposure for D&O Liability, because in effect, employees are stockholders in a company.  Any decision that pertains to the investment of money can be the subject of a stockholder lawsuit.  This legal action can come from stockholders or employees.

The Executive Protection suite of coverage is an important part of insuring corporate liability.  Contact us today for a quote!