Directors and officers need protection for their personal assets. The need is especially great now, in the wake of the financial crisis, which has opened the door for government investigators and the plaintiffs’ bar to seek to hold corporate officials responsible for investors’ losses. In this climate, liability insurance tailored narrowly to the needs of directors and officers is an option every corporate board should consider. Protection for individual board members and officers, the original purpose of directors’ and officers’ (D&O) liability coverage, becomes critical in financial crises. A type of D&O coverage called “difference-in-conditions” coverage fulfills this need. It can be purchased as part of a company’s D&O insurance program, in addition to the now-standard D&O coverage, which insures both directors and officers and the company for its own liability (or reimbursements of directors). A prudent choice is to hire counsel or a sophisticated broker to help navigate the different options that exist as regards D&O coverage.
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