directors' and officers' liability insurance

(redirected from Officers and Directors Liability Insurance)

Directors' and Officers' Liability Insurance

Insurance a publicly-traded company purchases to reimburse senior management, or the company itself, for damages and legal expenses incurred as the result of a lawsuit for negligence. For example, if the board of directors' actions led to a massive loss for the company resulting in a lawsuit, directors' and officers' liability insurance will cover the cost of the lawsuit for the company as a whole and the individual directors. It is important to note that directors' and officers' liability insurance does not cover intentionally wrong actions, only negligence. It is often called D&O insurance for short.

directors' and officers' liability insurance

A type of insurance taken to protect a firm's directors and officers against lawsuits—mainly suits instituted by unhappy shareholders of the firm. Directors' and officers' liability insurance has become more expensive and more difficult to obtain in recent years as the number of lawsuits has increased dramatically. Companies find it very difficult to recruit outside directors unless the candidates are supplied with liability insurance. Also called D&O Coverage.
References in periodicals archive ?
At the same time, the current environment for corporate indemnification of directors and officers is, to some degree, uncertain, spotlighting the criticality of traditional officers and directors liability insurance and creating demand for new forms of coverage.
OTCBB:JAWZE) today announces that the company was unsuccessful in its pursuit of a new insurance carrier for its officers and directors liability insurance policy.