Directors & Officers Liability: Are Your Personal Assets Protected?
Did you know that your role as director or officer puts your personal assets at risk?
As leaders of a company, directors and officers can be held personally liable for their management decisions. It’s common knowledge that shareholders, creditors, customers, suppliers, competitors and even the government can sue a company and its board. But, surprisingly, few directors and officers fully understand their personal liability exposure as interpreted by the courts.
Usually directors and officers have indemnity provided by the company for amounts that they are held liable for. However, indemnification is not always available for reasons such as financial insolvency of the company, prohibitions by law and indemnification provisions in company bylaws that are contrary to public policy or statutory limitations.
No need to worry. An appropriately written Directors & Officers (D&O) Liability policy will help protect your personal assets from D&O-related claims.
Have You Reviewed Your Policy?
Have you reviewed your D&O Liability policy for terms and conditions that may negatively affect coverage? Due to the current banking environment, many insurance carriers added exclusions and
restrictions to these policies that limit coverage. Some of those limitations include exclusions for:
- Claims brought by regulators
- Claims brought by creditors
- Claims that may arise from bankruptcy or insolvency
- Regulatory investigations
- Allegations of fraud without defense until final non-appealable adjudication