AXIS_A Guide to DO Litigation

Individuals serving as directors and officers (D&O) for any business can be held personally liable in certain instances if the organization they work for is sued. D&O litigation cost can be astronomical, so it may be wise to consider obtaining some insurance to offset the potentially steep costs.

What To Know

D&O liability insurance covers certain entities and certain people working for them in the event that they are sued. Directors and officers are covered for any personal losses under these policies. Additionally, the entity for which they work will be covered for legal fees and any other D&O litigation cost. Most policies will not cover fees associated with fraud or criminal activity. Typically an organization seeking $1,000,000 will pay between $5,000 and $10,000 in insurance premiums for D&O liability insurance.

Types of Coverage

There are three different types of coverage for D&O insurance. The first type, Side A coverage, covers directors and officers in suits where the company either cannot or will not pay for indemnification. Side B coverage covers the losses of those individuals when the organization refuses to grant indemnification. Side C coverage is also known as entity coverage and provides coverage for the business entity.

Since costs associated with D&O lawsuits can soar sky-high, it would be beneficial to many businesses to consider D&O liability insurance.