Directors and Officers Liability insurance protects against claims for what type of acts?

Directors and Officers Liability insurance (commonly referred to as D&O insurance) is specifically designed to protect individuals in corporate leadership positions against claims that arise from wrongful acts performed in their official capacities. This coverage typically extends to a range of actions, including mismanagement, errors in judgment, and failures to act in the best interest of the company and its shareholders.

The term "wrongful acts" encompasses a broad spectrum of actions related to the duties and responsibilities of directors and officers, such as breaches of fiduciary duty, misleading statements, and violation of industry regulations. By providing financial protection for legal costs, settlements, and judgements associated with these claims, D&O insurance enables corporate leaders to make decisions without the constant fear of personal financial loss due to litigation.

Understanding the nature of what is specifically covered by D&O insurance helps in recognizing the importance of protecting those who hold key positions in a corporation, as their decisions can significantly impact the organization and its stakeholders. Therefore, this insurance is integral to fostering effective management and leadership within a corporate structure.