Protecting Directors and Officers

Directors’ and Officers’ liability coverage is available to protect the organization, board members and officers (and their spouses), as well as other individuals in the organization serving as either employees or volunteers.  Now is a good time to review your coverage to make sure it is adequate to weather the ongoing financial storms.

One thing to check is coverage in case of bankruptcy.  Waiting until a company is faced with the decision is too often too late.  And the possibility of being the target of several different lawsuits at the same time, each requiring separate teams of lawyers, can exhaust limits on a single policy.

This is especially true for publicly-held corporations as the SEC conducts investigations.  The enormous costs of electronic discovery required by a defense team alone can be staggering.  While typical D&O policies may not cover these expenses, SEC investigations can be specifically included.

Some D&O insurers credit a policyholder for legal expenses to mitigate a problem that could have become more expensive later, even if the expenses were incurred before a trigger of coverage.

From Business Insurance, March 16, 2009 issue, p. 18.