Directors and officers liability insurance
From Wikipedia, the free encyclopedia
Directors and Officers Liability Insurance is insurance payable to the directors and officers of a company if they get sued for something that happened while they were with that company.
Typical sources of claims include shareholders, shareholder-derivative actions, customers, regulators, competitors (for anti-trust or unfair trade practice allegations).
Directors and Officers Liability insurance is commonly referred to as D&O in the insurance industry.
Directors and Officers Liability insurance is commonly purchased with a companion product "Corporate Reimbursement insurance", also known as "Company Reimbursement insurance". When purchased together, a single insurance policy is normally issued which is entitled "Directors and Officers Liability and Company Reimbursement insurance".
D&O insurance is often purchaed by the company itself, even when it is for the sole benefit of directors and officers. Reasons for doing so are many, but commonly would assist a company in attracting and retaining directors. Where a country's legislation prevents the company from purchasing the insurance, a premium split between the directors and the company is often done, so as to demonstrate that the directors have paid a portion of the premium.
