Directors and officers liability insurance is one of the few types of insurance that interests a company’s senior management. This is because D&O is one of the few insurance products left that still provides reasonably broad protection against serious losses and defense costs—a protection that is especially valuable in a time where many corporations are on life support. Ironically, the broad scope of D&O coverage gives rise to its own set of problems—namely, a fight between various insured interests for the policy proceeds.
D&O policies protect against a wide range of liablilities including regulatory actions, class actions, derivative suits, federal and state securities suits and state breach
of duty suits. These suits may be brought by investors, customers, creditors, government agencies, law enforcement officials, former insureds, employees and sometimes trustees in bankruptcy. Equally varied is the number of potential insureds, which typically include past, present and future directors and officers, in-house attorneys, the company itself and sometimes specific employees or even outside parties.