Is Your D&O Insurance What It Should Be?
Every business entity and non-profit organization bears some risk arising from the activities of its management—public corporations, privately held companies, investment firms, financial institutions, charitable foundations, advisors, consultants and others. Insurance for such risk is widely available, but significant variations exist among policies that provide coverage for directors, officers, general partners, managers, and others involved in management (generically, “D&O” policies). Importantly, whether or not a D&O policy includes a particular provision or endorsement can impact the outcome of a request for coverage. A firm may not recognize limitations in its D&O policy, however, until a claim or potential claim arises. Of course, it is difficult to predict when or how a lawsuit, governmental investigation, securities claim, arbitration or other action targeting management may arise. This is a good time to assess whether your management liability policy provides the appropriate breadth of coverage.