Many business owners think that their General Liability (GL) insurance will cover their Directors & Officers Liability Insurance exposure. The GL policy is not intended to cover many if not all the issues that can be brought against privately held companies. Many claims can’t by law be indemnifiable through the corporation. Many Directors & Officers hold to the belief that if the corporation dissolves their exposure ends. Nothing could be further from the truth. Directors & Officers personal assets could be at risk.
If you are the owner of a private company, you have worked very hard to build something that provides you with personal satisfaction, success, and most importantly financial security for your family’s future. Tillinghast-Towers Perrin reported that the cost of defending Directors & Officers Insurance litigation can range from $100,000 to $2,000,000. Can your business and your future afford that expense?
Common Directors & Officers Insurance allegations include:
- Failure to perform appropriate due diligence when making an acquisition
- Misrepresentations or errors regarding the financial health of the organization to a customer
- Misstatements regarding potential future performance of the company to investors
- Careless management strategy that causes bankruptcy
- Breach of duties under applicable security or other statutory laws
- Conflicts of interest when considering personal motives vs. the interests of the shareholders
Here are a few examples of actual Directors & Officers Insurance Claims
- A director of medical supply company was sued, along with his company, for allegedly misappropriating trade secrets. $200,000 was spent on defense costs and the case was settled for $400,000.
- The estate of a recently passed director sued the other directors for recent company poor performance. Claim settled for $750,000.
- A company recruited a top sales person from a competitor who had an employment contract. The competitor sued for damages after losing its top producer. Defense costs were $250,000 and case was settled for $560,000.
Contac Safe Harbor Insurance today for a review of your coverage. We can provide a competitive quote for your company.