As the year comes to an end, many companies, along with their officers and board members, are considering renewals for directors and officers (D&O) insurance coverage. The coverage offered under various D&O policies varies from insurer to insurer, and the language of key provisions is often negotiable. The purpose of this Alert is to remind individual and corporate policyholders of the protection available under D&O liability insurance and to highlight five issues that should be at the forefront of the minds of risk managers, in-house lawyers, and directors and officers as they consider the coverage afforded under these policies.

Five Issues to Keep in Mind When Assessing Coverage

The claims environment faced by corporations and their directors and officers today continues to be rife with shareholder suits, SEC and DOJ investigations, Sarbanes-Oxley claims, and state regulatory investigations. As a result, directors and officers must remain vigilant to ensure that their participation in corporate decisionmaking does not subject them to potentially catastrophic losses. Corporations, too, are vulnerable to unforeseen liabilities, including restated financials and the inevitable shareholder derivative lawsuits that follow. Unfortunately, these claims are not likely to go away anytime soon, and the risk of potential liability remains a significant threat.