directors and officers insurance basics
DESCRIPTION
This presentation explains critical concepts in D&O insurance that board members must understand regarding their personal liability.TRANSCRIPT
LAW FIRM EVOLVEDPC
D&O Insurance Basics
Douglas Y. Park March 13, 2013
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Why You Need D&O Insurance
Personal liability
Frequency and types of D&O suits
General liability and indemnification not enough
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How D&O Insurance Works
Lawsuit filed against D&O
D&O file a claim with insurance company
Insurance company covers costs of defense or disputes applicability of coverage
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Key Terms
Indemnification
Director duties: Care and loyalty
Limits per claim and cumulative
Costs of defense
Costs of settlement and judgment
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Scope
Depends on specific policy: Understand it!
Does the policy cover Employment Practices Liability Investigations
Common exclusions Actions not taken in insured capacity Intentional wrongdoing Criminal allegations
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The Sides of D&O Policies
Side A: Covers D&O losses for defense costs, settlements, judgments if company cannot indemnify
Side B: Covers company for D&O losses when it does indemnify
Side C: Covers the company’s losses
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Special Situations
Protect innocent D&O
Protect the entity or not (Side C)
Purchase D&O insurance in other countries
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Attorney-Client Privilege
Company Counsel Do not use employer’s email system
Board Counsel Special committees: Share att’y reports?
Personal Counsel Same as company counsel Communications presumed privileged
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When To Retain Own Counsel
Only you or a few directors are being sued
You face criminal charges in board capacity
Dispute among board members
Check whether D&O policy covers you
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Takeaways
Weigh benefits and risks of board service
Don’t assume you are protected
Understand your policy
Consider additional policies and coverage
