Time To Check Your D&O Coverage

It has become clear that not all D&O insurance coverages are created equal. And, in many instances, your policy may not provide the coverage that you count on. Clearly, in recent years, liability exposure for corporate directors has significantly increased. Earlier, outside directors not only were thought to be shielded by the application of the business judgment rule, but also protected by liability exculpation provisions contained in articles of incorporation, indemnity provisions providing up to the maximum allowed by state law (and in many instances individual indemnification contracts), as well as D&O insurance coverage on top of or to supplement or fund those protections. The erosion of protection not only for outside directors but also directors and officers generally, is a direct result of the corporate scandals that have erupted over the last several years, in one case creating the largest corporate bankruptcy in history, all due in large measure to fraudulent activity on the part of some.