Unhappy shareholders, customers, vendors, suppliers, and creditors often choose litigation to air their grievances against a company and frequently name the company’s directors and officers as defendants. The company’s executive team may be sued for a variety of reasons, including alleged financial mismanagement, misuse or theft of intellectual property, negligent business decisions, or the failure to comply with workplace laws. These accusations harm reputations and careers, threaten livelihoods and impose significant financial burdens on both the companies and their leaders. Directors and Officers (D&O) liability insurance is designed to protect a business and its leadership against these risks.
What Are Directors & Officers Liability Policies?
Unlike Commercial General Liability insurance, which protects a company from liability to third parties for the unexpected consequences of its operations, directors’ and officers liability insurance is designed to protect a company’s management team against claims arising out of their intentional conduct on behalf of the company. Leaders often make difficult choices in the course of their duties, and directors’ and officers liability insurance ensures that they can make those decisions without the fear of personal liability when they give rise to claims by shareholders and other stakeholders. Not only does D&O insurance protect the financial assets of corporate officers, but directors and officers’ insurance often provides coverage for the company itself by covering legal fees, settlements, and other associated costs.
Litigation targeting a company and its leadership team arising out of the team’s management of the enterprise often is complex and nuanced; navigating the insurance disputes under directors and officers policies implicated by these kinds of claims can be challenging. Disputes over D&O coverage may occur because of disagreements over whether an individual insured’s conduct is covered, or whether the alleged damages qualify as a covered “loss” under the directors and officers policy. And because these claims-made policies include onerous notice requirements, disputes often arise over the timeliness of the company’s notice to its D&O liability insurer. Even once coverage is established, policyholders often find themselves disputing complex issues of allocation between covered and uncovered parties and claims.
Directors & Officers Liability Policies: How We Can Help
Payne & Fears insurance litigators have experience resolving these and other disputes arising out of D&O liability insurance claims. We represent companies and their officers and directors through all stages of these coverage disputes—from ensuring that notice requirements are met, to framing the claim to trigger and maximize coverage, to litigating disputes when they cannot be informally resolved. We have decades of experience handling coverage disputes for companies of all sizes, from small, closely held businesses, to non-profit charities, to publicly traded Fortune 500 companies.
D&O insurance claims often involve alleged losses that cross into Errors & Omissions (E&O) policies, as well as other professional liability policies. Our team is fluent in the intricacies of all insurance products, and from the moment any claim is made against our clients or their leaders, we help them review all their coverages and take the steps necessary to maximize their claims and navigate any coverage dispute.