Wrongful act allegations and lawsuits have become increasingly more common and frequently name members of boards of directors or officers. In some cases, directors and officers could be held personally liable for damages. When such a claim arises, Directors and Officers (D&O) liability insurance can help cover the cost of defending against the legal action and cover the cost of awards or settlements arising out of the lawsuit.

All organizations and the individuals who lead them are vulnerable to D&O exposures. Private companies, public companies, nonprofit organizations, and financial institutions can all benefit from D&O liability insurance. The types of claims that arise may include:

• Securities litigation
• Allegations of misrepresentation
• Breach of fiduciary duty allegations
• Regulatory actions

Types of D&O Liability Coverage

A D&O policy for a privately held company may contain several different types of coverage such as a-side, b-side, and c-side.

A-Side Coverage

This covers directors, officers, and employees in some cases, when the company cannot indemnify them, for defense costs, judgments, and settlements.

B-Side Coverage

When the company does indemnify officers, directors, and employees, this portion of the policy covers the company for their losses.

C-Side Coverage

This is also known as “entity coverage.” It is designed to protect the corporation itself financially.

Cost of Directors and Officers Liability Insurance

The cost of D&O insurance can depend on a variety of factors, including:

• Type of business
• Company revenues
• Prior legal claims
• Amount of debt

The best way to find out how much your D&O liability insurance will cost is to obtain quotes from several different insurers. Our agent at Campion Insurance, Inc. in Bel Air, Maryland, can help you evaluate the current market to identify a plan that provides the maximum D&O coverage for your money.