D&O INSURANCE
Directors And Officers
Insurance for Private Companies
M
any businesses wrongly
assume that directors and
officers (D&O) insurance
is only necessary for
publicly traded companies.
However, privately held organizations can
just as easily fall victim to lawsuits that
can impact the company, its officers, and
the board, making D&O insurance a must. While D&O insurance provides a last
line of defense for organizations and
their leadership teams, the best way to
protect against a D&O claim is to avoid
them altogether. Understanding the main
sources of D&O liability can go a long way
in avoiding costly legal action.
SOURCES OF D&O LIABILITY EMPLOYEES
Regardless of your company’s size or
mission, the legal costs associated with
a D&O lawsuit can be crippling for both
an organization and its leadership. To
complicate matters, D&O liability can Most directors and officers are surprised
to learn that employees are one of the
most common sources of a D&O claim. In
fact, for private businesses and nonprofit
organizations, employees represent a
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come from a variety of sources, and claims
can arise without warning.
major D&O exposure.
If employees are mistreated during any
phase of their employment, they may
bring their concerns to the organization’s
management team. If employees feel that
their concerns have not been addressed
in a sufficient manner, they may seek
legal action as a means of resolving their
grievances.
Common employment practices claims
against directors and officers include the
following allegations:
• Wrongful dismissal
• Discrimination, including workplace