What is directors’ and officers’ liability insurance?
It’s insurance to protect the individuals who serve as directors and officers of a company. The duties of a director and officer really include the duty of loyalty, the duty of care and the duty of obedience. A breach of those duties is what leads to a variety of claims. Many times, this type of insurance can also protect the company itself from a variety of lawsuits. Who can make a claim against a director or an officer? Most people think only stockholders can file a claim, but actually, any stakeholder can do so. A stakeholder can be a customer, competitor, vendor, fellow board member and even employee. The Tillinghast 2003 Directors’ and Officers’ Liability Survey states that half of all claims made against directors and officers are made by shareholders while a third of all claims are made by employees. Directors and officers of companies experiencing mergers and acquisitions or divestiture activities are more exposed to claim potential. What kinds of claims are covered by director
