Directors & Officers Liability Insurance (D&O)
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At a Glance
Directors & Officers Liability Insurance can safeguard the assets of the corporate entity as well as the personal assets of your firm’s directors and officers, including your chief Compliance Officer.
Directors & Officers are often held personally liable for the decisions they make on behalf of a company in both public and private companies. As a director or officer with an organization, one must exercise the Duty of Loyalty, the Duty of Obedience, and the Duty of Diligence. Duty of Loyalty exemplifies that a director has put the interest of the corporation above his own. Duty of Obedience portrays a director's actions have conformed to the corporate charter and by-laws of the corporation. Duty of Diligence in the management of the corporation and done in an expedient and knowledgeable manner. In fulfillment of the duties, a director and/or officer is required to exercise reasonable care and due diligence, place the interest of the corporation and its shareholders foremost in the decision-making process and not exceed his or her authority.
Directors & Officers are often held personally liable for the decisions they make on behalf of a company in both public and private companies. As a director or officer with an organization, one must exercise the Duty of Loyalty, the Duty of Obedience, and the Duty of Diligence. Duty of Loyalty exemplifies that a director has put the interest of the corporation above his own. Duty of Obedience portrays a director's actions have conformed to the corporate charter and by-laws of the corporation. Duty of Diligence in the management of the corporation and done in an expedient and knowledgeable manner. In fulfillment of the duties, a director and/or officer is required to exercise reasonable care and due diligence, place the interest of the corporation and its shareholders foremost in the decision-making process and not exceed his or her authority.
Types of D&O Coverage available:
The most traditional type of directors' and officers' coverage is for claims against individual directors, officers, and the collective board.
The second traditional coverage, and most frequently used, is for corporate reimbursement, which funds the indemnification of individual directors & officers as provided for in the corporate charter or by-laws. Given this situation, generally the organization's by-laws must operate first with respect to indemnification (making directors & officers "whole" again). After a covered claim situation, the corporation is reimbursed subject to the deductible amount and policy limit.
A third coverage area, which has more recently evolved, applies to claims against the corporation itself primarily for alleged securities violations. A drop in stock value can trigger a class action law suit against individual directors & officers, the entire board and the corporation itself. Electronic trading has caused a rapid growth in this type of claim.
The Directors & Officers Liability Insurance offered through Seabury & Smith covers all three types of these exposures.
The second traditional coverage, and most frequently used, is for corporate reimbursement, which funds the indemnification of individual directors & officers as provided for in the corporate charter or by-laws. Given this situation, generally the organization's by-laws must operate first with respect to indemnification (making directors & officers "whole" again). After a covered claim situation, the corporation is reimbursed subject to the deductible amount and policy limit.
A third coverage area, which has more recently evolved, applies to claims against the corporation itself primarily for alleged securities violations. A drop in stock value can trigger a class action law suit against individual directors & officers, the entire board and the corporation itself. Electronic trading has caused a rapid growth in this type of claim.
The Directors & Officers Liability Insurance offered through Seabury & Smith covers all three types of these exposures.
Sources of Directors & Officers claims:
- Shareholders (44%)
- Employees (28%)
- Customers & Consumer Groups (14%)
- Competitors (8%)
- Other Third Party claims (4%)
- Government (2%)
How to Apply
Please click here to download the Directors & Officers Liability Insurance Application. You may fax your completed application to 1-202-367-5020, or you may mail it to our office at the address below. You can also find a link to the application under Forms & Links on this page.
AR Ins. Lic. #245544
CA Ins. Lic. #0633005
d/b/a in CA Seabury & Smith Insurance Program Management
AR Ins. Lic. #245544
CA Ins. Lic. #0633005
d/b/a in CA Seabury & Smith Insurance Program Management
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