Insurance Read Time: 2 min

Directors and Officers Liability Insurance

Liability insurance for directors and officers is not just for large public companies; it can be an equally valuable risk management tool for smaller businesses.

Directors and Officers (D&O) liability insurance helps protect directors and officers of public and private for-profit businesses of all sizes, as well as non-profit organizations, and educational institutions.

A D&O insurance policy provides financial protection for managers against claims arising from actual or alleged “wrongful acts” of directors and officers acting within the scope of their managerial duties. A D&O policy is designed to pay for defense costs and financial losses. It may also cover the costs associated with administrative and criminal proceedings and with investigations by regulators or criminal prosecutors.

D&O insurance is not designed to cover certain risks, such as those attached to fraud, intentionally bad acts, illegal remuneration, property damage and bodily harm, and pre-existing legal actions.

Primary D&O Risks

The risks confronting directors and officers are manifold, and may include:

  • Employment practices and other human-resource-related issues
  • Shareholder actions
  • Reporting errors
  • Inaccurate and inadequate disclosure
  • Failure to comply with laws or regulations
  • Decisions that exceed the authority of a company officer

D&O insurance is not just about protecting directors and officers against the financial risks that may arise from the decisions they make. A key benefit of having such protection is that it provides company officers and members of a company board with the room to make decisions with the knowledge that the risks attached are manageable and transparent.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

Starting a Roth IRA for a Teen

Starting a Roth IRA for a Teen

This early financial decision could prove helpful over time.

Planning for All Families

Planning for All Families

These planning tips can help.

The Sequence of Returns

The Sequence of Returns

A look at how variable rates of return impact investors over time.

 

Have A Question About This Topic?







Thank you! Oops!

How to Spend Again After Saving

When people save, it brings life rewards. But sometimes after being on your best money behavior for a long time, you want to cut loose and spend. It can happen whether you’ve been saving to buy a home, rejoined the workforce or survived a global pandemic.

Whole Life Insurance Can Be an Asset For Balance

Even if you didn’t grow up on a farm, you’ve heard, “Don’t put all your eggs in one basket.”

Why Medicare Should Be Part of Your Retirement Strategy

How Medicare can address health care needs in your retirement strategy.

View all articles

Long-Term-Care Needs

Determine your potential long-term care needs and how long your current assets might last.

Contributing to an IRA?

Determine if you are eligible to contribute to a traditional or Roth IRA.

Bi-Weekly Payments

This calculator estimates the savings from paying a mortgage bi-weekly instead of monthly.

View all calculators

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

Your Cash Flow Statement

A presentation about managing money: using it, saving it, and even getting credit.

Principles of Preserving Wealth

How federal estate taxes work, plus estate management documents and tactics.

View all presentations

When Do You Need a Will?

When do you need a will? The answer is easy: Right Now.

What Can a Million Dollars Buy You?

$1 million in a diversified portfolio could help finance part of your retirement.

Emerging Market Opportunities

What are your options for investing in emerging markets?

View all videos