D&O Insurance FAQs

WHO AND WHAT ARE COVERED BY A D&O POLICY?

D&O provides protection to a company's directors, its officers, and usually the organization itself (publicly traded companies have securities protection only) for monetary judgments or settlements for negligence, or breach of duty of the directors and officers on behalf of the organization. The policy also indemnifies for legal expenses.

HOW DOES THE POLICY WORK?

The first line of protection to directors and officers is a corporate indemnification agreement, typically found in the organization's charter or by-laws. The D&O policy indemnifies an organization for payments made to its directors or officers under an indemnification agreement. In the absence of an agreement, or if the organization can't fulfill its obligations, the policy will directly indemnify the directors and officers. Many policies also respond to claims made against the organization itself.

WHAT IS CONSIDERED A CLAIM?

The definition of a claim varies but often includes civil, criminal, judicial, administrative, regulatory, or arbitration proceedings and investigations.

WHO IS COVERED?

Covered persons generally include past, present, and future:

  • Directors
  • Officers
  • Trustees
  • Employees

WHAT TYPES OF CLAIMS TRIGGER COVERAGE?

Common complaints include breach of fiduciary duty (such as using position to gain advantage as a supplier) or failure to exercise due care (agreement to payments or expenditures without sufficient investigation). Another common exposure for large employers is employment-related suits that allege harassment, discrimination, or wrongful termination.

WHAT ARE TYPICAL EXCLUSIONS?

The most common exclusions are those for bodily injury and/or property damage, pollution, violation of ERISA regulations, actions brought by one insured versus another, and failure to effect or maintain insurance. Many of these exposures can be addressed by a separate insurance policy.

"Conduct exclusions" are also typical, and may include exclusions for intentional, dishonest or fraudulent acts, the willful violation of a statute rule or law or criminal acts, or any gaining of personal profit or advantage that the director was not entitled.

Directors and Officers (D&O) liability is an intricate product, and the insurance needs vary for public, private, and not-for-profit companies. For expertise and market access, HUB is your source.

Contact a HUB D&O Liability Insurance advisor today.