This is the first of two posts discussing several major aspects
of directors' and officers' liability ("D&O")
insurance coverage. Companies approaching a policy renewal
deadline, looking to place D&O insurance for the first time,
considering increasing the size or structure of an existing D&O
insurance program, or otherwise evaluating their overall risk
management strategy may find it useful to review some basic
features of D&O insurance and potential enhancements.
Why is D&O insurance important?
D&O insurance is an important risk management tool for any
company. It functions as a financial backstop for directors and
officers by shielding these individuals from personal liability if
the company is unable to indemnify them (usually due to a legal
prohibition on indemnification or insolvency). D&O insurance
also adds value to and financial protection for the company by
providing coverage for certain claims asserted against the
company—most typically, securities
