Protect The Directors and Officers Of Your Company
Directors and Officers (D&O) insurance covers directors and officers of a company for claims made against them while serving on a board of directors and/or as an officer. Coverage includes defense costs and damages (awards and settlements) arising out of wrongful act allegations and lawsuits brought against an organization’s board of directors and/or officers. In a way, D&O policies function as “errors and omissions” insurance for the board of directors and officers against claims resulting from managerial decisions that have negative financial consequences.
EXAMPLES OF D&O COVERAGE SCENARIOS
Misappropriation of Trade Secrets – A competitor sued a design professional firm and several of the competitor’s former employees alleging the misappropriation of trade secrets. Specifically, the competitor alleged that several of its former employees, upon termination, took sales lists which they used when they were hired by the design firm. The D&O carrier representing the design firm paid $153,000 in legal costs to defend the design firm.
Theft of Intellectual Property – A software developer sued the insured’s management team for stealing his intellectual property (IP). After a joint venture between the parties failed, the plaintiff claimed the insured organization took his ideas and developed its own software, allegedly retaining and using the IP to create a competing product. The carrier paid in excess of $200,000 in defense expenses, in addition to making a $50,000 payment (damages) toward the settlement.
Breach of Contract – Directors and officers of the insured were sued for failure to comply with the terms of a joint venture agreement. The plaintiff was having financial difficulty at the time the joint venture agreement was signed and claimed the insured intentionally failed to perform under the joint venture in order to force the plaintiff into bankruptcy. The plaintiff further alleged this was done in an effort to acquire the plaintiff’s clients. The insurance carrier paid $75,000 in defense expenses.
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