Directors and Officers Liability Insurance

There is no standard form for D&O liability insurance. Each Insurer offering this coverage develops its own policy.

Thus the directors and officers liability exposure affects both the individual individual directors and officers and the corporation itself. Many Corporations protect themselves and their directors and officers against this exposure by purchasing Directors & Officers (D&O) Liability Insurance.

In recognition of the potentially devastating liability exposure faced by individual directors and officers, many corporations agree to indemnify their directors and officers for the costs resulting from suits against them. The laws of several states permit or even require corporations to provide such indemnification to their officers and directors.

Dozens of cases show, the individuals who serve as the directors and officers of a corporation can be sued, as individuals, for breach of their corporate duties. Frequently, the plaintiffs are stockholders of the corporation, who may feel that they have been harmed financially by negligent management of the corporation. In other cases, the suit may be brought by employees of the corporation or by outsiders, such as customer or clients.

Directors and Officers Liability Policy cover the directors and officers of a corporation against claims alleging that they suffered damages as a result of the employer's discrimination, wrongful termination, sexual harassment, or various other employment-related offenses.

About the Author: Ahsan Bashir is an experienced Tax Consultant based in Irving, Texas, with over 25 years of expertise spanning Taxation, Accounting, Business Lending and Mortgage, Risk Management, Business Insurance, and Business Consulting. Through his firm, Z-Tax & Accounting, he provides comprehensive financial services including Individual and Business Tax Preparation, Bookkeeping, Payroll Processing, and Business Consulting. As an Enrolled Agent authorized to practice before the Internal Revenue Service (IRS), and an IRS Certifying Acceptance Agent (CAA), Ahsan Bashir delivers trusted, professional solutions tailored to the unique needs of both individuals and businesses.

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