The Three Sides of Directors and Officers Insurance

Insurance policies that cover directors and officers for private companies typically offer protection against the risk of legal costs. While commonly referred to as a single D & O package, there are actually three distinct aspects to most of these plans.

Side A

This protects the private assets of the upper level managers and directors. Sometimes a company does not indemnified these employees against liabilities. When this happens, the officers and directors are personally responsible for claims filed against them due to any allegations of wrongful conduct. Side A of a D & O policy covers the legal expenses these specific individuals may face.

Side B

This portion of the policy protects the company itself against the costs of defending against legal claims filed against indemnified agents of the firm. Even though an indemnified manager may not be personally held liable for these claims, the company still faces all associated costs. This side of a policy helps a private firm to meet its obligation to indemnify senior executives and directors.

Side C

This portion of the policy protects against suits that are filed against the individual manager and the company at the same time. For publicly traded companies, this level of protection usually only protects against securities claims. Private companies typically enjoy a much broader level of coverage. Depending on the specifics of the policy, these plans may be applicable in more general instances.

A robust policy insures directors and officers for private companies. Contact an agent to find out more information or to create a specific plan for your business.