The Executives of every company face uncertainties when carrying out the duties and responsibilities of their positions. Designing insurance protection around those liabilities has also become increasingly complex. Appropriate insurance protection depends upon the structure of the organization, the makeup of the Board, individual preferences of the executives and specific objectives of the company.
D&O coverage issues vary for non-profit companies, privately held for-profit corporations, partnerships and joint ventures, financial institutions, publicly traded companies and companies planning Initial Public Offerings. Underwriters preferences for these risks vary and coverage differences abound.
In general, a D&O Liability policy provides a promise to pay defense costs, judgment and settlement amounts for breaches of duty alleged against those individuals or companies insured by the policy. Coverage is written to cover claims made against Insureds during the policy year and reported to the insurer during the time specified by the policy.
Limits are typically purchased on an annual basis, with one aggregate limit applicable per year. Because most D&O policies cover the assets of individuals and the company, limits available in one year could be used to protect the company's assets, leaving the Executives without coverage. Additionally, independent directors may not want to share limits with insiders. Separate policies designed to protect these different objections are available. The Executive Liability Practice at HUB International Insurance Services is ready to design a D&O program specific to your needs.