Directors and officers liability insurance (D&O) is designed to cover the corporation and the directors and officers serving on their board. Members of a company’s board of directors can be charged with liability for a number of actions or inactions pertaining to the business. However, in many cases where corporate interests may clash with those of the individuals responsible for managing its affairs, the coverage may differ.
While an indemnity policy protects the corporation, a D&O policy covers the individual acts of directors and officers, which without, they would face serious exposures. When the corporation is at fault, it would be covered solely by an indemnity policy, which is available from oc insurance.
D&O is a vital part of any liability coverage package
Any company, including non-profit organizations, charitable trusts, and civic associations can all benefit from a D&O package. The one common thread that binds them together is the concept of a duty owed by an officer or director to its constituents, such as employees, shareholders, and the corporation itself. D&O liability came about as a solution to such matters as breaches of fiduciary duty and good faith that were beyond the common law courts.
Anyone suffering any sort of damages at the hands of board members, from a drop in share price to wrongful termination, can accuse the actions of members or a manager of having breached a corporate duty. Many consider D&O coverage an integral piece in the field of liability concerns. It was designed to protect officers and directors, as well as the corporate entity, and was concerned with issues related to business litigation. There are many different types of issues involved, such as public policy concerns, fraud, illegally releasing trade secrets, unfair competition, and employment practices.
Many of these exposures require a need for coverage of a broader type. D&O policies will not cover criminal activities, and are primarily concerned with civil remedies. Private company risks are less concerned with securities violations. Their main exposure is to employees with regards to employment practices, but any company that employs one or more individuals (or deals with customers, clients, competitors, the government, or other third parties) has a D&O exposure, making the purchase of a directors and officers liability policy from oc insurance a smart choice.
Part of the process in keeping workers comp insurance rates low is ensuring an accurate portrayal of your loss history. Reviewing your claims history with help to make sure no errors are in your record, possibly inflating your premiums. Speak to a representative at oc insurance to discuss any questions you have pertaining to this vital coverage.