Directors and Officers (D&O) insurance is a must for every business owner. Many types of claims can be filed against the directors, officers, managers, and other executives of a company. Even if the owners weren’t aware of any illegal acts, they are liable to pay for legal fees and other damages if they don’t have proper coverage.
D&O Insurance Claims Examples
Let’s take a look at some typical D&O claims that business owners may face.
- Stolen proprietary secrets – An executive has access to a customer’s proprietary blueprints, and he decides to sell them to a competitor. The customer sues the business owner for millions of dollars, even though the owner was not aware.
- Misrepresentation – An officer of the company gives false or misleading information to investors, directing them to make bad decisions on behalf of the company.
- Fraud – Executives in a company engaged in stock offerings that are based on personal interest, rather than what is best for the common shareholders. These offerings help to boost the executives’ portfolios while being detrimental to the other shareholders.
A business owner can be held liable for so many potential claims against the directors and officers of the company. D&O insurance coverage is critical in order to protect their investment.