Many directors and officers feel protected from a lawsuit with the business’ directors and officers insurance policy. Unfortunately, this may not be entirely true thanks to presumptive indemnification. These limitations can result in the director or officer facing a claim not covered by the insurance.
D&O insurance policies cover the legal expenses when the company or individual is sued while they are serving on the board of the company or organization. These legal costs can include lawyer fees and trial defense costs. Many businesses have retention they must pay in the event a claim is filed against their directors and officers.
Relying on the business to protect you in a lawsuit may leave you financially responsible. Some businesses may not want to pay the retention due to the cost and then the policy doesn’t cover the director or officer in the lawsuit. Your insurance agent may suggest an additional insurance policy to cover some of the gaps such as a professional liability policy.
Speak to your insurance agent to see how specific the presumptive indemnification provisions are and what that means for you specifically in the event of a lawsuit. Knowing what the policy covers can help you determine whether or not you need additional coverage to protect your own financial assets.