Why Private Held Companies Buy Directors & Officers Liability Insurance

If you’re like me, you’ve worked hard to build your company, so why wouldn’t we protect what we have worked hard to establish? In today’s regulation crazed and litigious economic environment, nearly anyone can present claims against directors, officers or owners of a company for their decisions and actions.

With limited exceptions, your General Liability insurance only responds to bodily injury and property damage claims. So how do we protect ourselves? Public companies have purchased Directors & Officers coverage for years; now many private companies are as well. D&O Liability insurance responds to many claims like those listed below, without which you could be personally liable.

A recent study of 451 executives discovered 26% of the companies experienced a D&O suit in the last 5 years. These suits cost on average: $129,625 for those companies with D&O insurance and $408,469 for those without. (1)
Who typically makes these charges? Shareholders, Competitors, Lenders, Government Agencies or Suppliers. What are some of the most common allegations?

  • Minority shareholder claims of adverse decisions
  • Breach of Fiduciary duty
  • Unfair or deceptive trade practices
  • Fraud
  • Misappropriation of trade secrets
  • Infringement
  • Allegations of misleading competitor statements
  • Debt collection
  • Inaccurate disclosures
  • Questioning quality of products or services
  • Accusations following financial difficulties
  • Investigations by government agencies
  • Breach of contract or contract disputes

If you want to know more about D&O Insurance for your company call or email me today.

bradg@missourigeneral.com 314*983*2383

(1) http://plusweb.org/Portals/0/Chapter%20Material/NC-April17.pdf