Who Does Directors and Officers Insurance Protect?

businessCompany leaders hold the financial stability of the business in their hands.  Stockholders trust these individuals to make wise choices that will cause the company to thrive.  Directors and officers liability insurance is designed to provide funds to cover litigation resulting from wrongdoing on the part of the board members.  D&O insurance protects the personal assets belonging to the people who participate company leadership activities.

Insurance companies issue D&O liability insurance policies that has two facets:

  • Side A Component – Protects the company directors and officers from personal financial liability when the corporation is unable to indemnify the officer or director.  This situation is common throughout a bankruptcy proceeding or dissolution.
  • Side B Component – Protects the corporation when the company is able to indemnify the officers and directors.  Shareholder lawsuits can bring about this situation.

A third type of coverage is available under “Side C” to insurance all parties when the corporation and individual directors and officers are named in litigation.  The intricacies of D&O liability insurance should be discussed with experienced insurance company representatives.  Sufficient insurance is required to protect all parties in each situation.

For all your insurance needs in La Habra, California, contact Martplan Insurance to get a quote, today!