D & O Insurance: A Primer

31 Pages Posted: 23 Apr 2018 Last revised: 12 Jul 2018

See all articles by Lawrence J. Trautman

Lawrence J. Trautman

Prairie View A&M University - College of Business

Kara Altenbaumer-Price

U.S.I.

Multiple version iconThere are 2 versions of this paper

Date Written: 2012

Abstract

It is unquestioned in today's business and litigation climate that corporate officers and directors face significant exposure based simply on their roles and titles, no matter how effectively, carefully, or in good faith their decisions are made. Director and officer insurance, often called D&O, is designed to protect executives, outside directors, as well as the companies they serve against liability arising from actions taken in the course of doing business.

Claims against officers and directors come in many forms, ranging from common law claims for breach of fiduciary duty to shareholder class actions for violations of the securities laws. Even when these allegations are baseless, companies-as well as individual directors and officers-may still face significant defense and settlement costs. D&O insurance, in tandem with indemnification, is designed to protect against the legal expenses of fighting litigation, as well as the underlying liability exposure. Our goal in writing this article is to present a basic explanation: what D&O insurance covers, what it doesn't cover, how the market for coverage availability waxes and wanes over time, and what you can do to minimize insurance costs and improve coverage terms.

Keywords: D&O, fiduciary duty, business law, litigation, directors, shareholder, D&O insurance

Suggested Citation

Trautman, Lawrence J. and Altenbaumer-Price, Kara, D & O Insurance: A Primer (2012). American University Business Law Review, Vol. 1, No. 2, 337. Available at SSRN: https://ssrn.com/abstract=3155974

Lawrence J. Trautman (Contact Author)

Prairie View A&M University - College of Business ( email )

Prairie View, TX
United States

Kara Altenbaumer-Price

U.S.I. ( email )

1445 Ross Avenue
Ste 4200
Dallas, TX 75202
United States
2144433127 (Phone)

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