Many business owners think that their General Liability (GL) insurance will cover their Directors & Officers Liability Insurance exposure. The GL policy is not intended to cover many if not all the issues that can be brought against privately held companies. Many Directors & Officers hold to the belief that if the corporation dissolves their exposure ends. Nothing could be further from the truth. Directors & Officers personal assets could be at risk. Fortunately, Directors & Officers Insurance is very competitive and easy to obtain.

If you are the owner of a private company, you have worked very hard to build something that provides you with personal satisfaction, success, and most importantly financial security for your family’s future.

Directors & Officers Insurance allegations can include:
  • Failure to perform appropriate due diligence when making an acquisition
  • Misrepresentations or errors regarding the financial health of the organization to a customer
  • Misstatements regarding potential future performance of the company to investors
  • Careless management strategy that causes bankruptcy
  • Breach of duties under applicable security or other statutory laws
  • Conflicts of interest when considering personal motives vs. the interests of the shareholders
Here are a few examples of actual Directors & Officers Insurance Claims:

A director of medical supply company was sued, along with his company, for allegedly misappropriating trade secrets. $200,000 was spent on defense costs and the case was settled for $400,000.

The estate of a recently passed director sued the other   directors for recent company poor performance. Claim settled for $750,000.

A company recruited a top sales person from a competitor who had an employment contract. The competitor sued for damages after losing its top producer. Defense costs were $250,000 and case was settled for $560,000.