Meaning
Insurance coverage within a directors and officers policy that specifically protects the personal assets of individual leaders when the company is unable to indemnify them. Utilization of side a d and o occurs in situations such as corporate insolvency or when local laws prohibit the firm from paying the legal costs of its officers. This layer of insurance acts as a final safety net for the personal wealth of the board members.
Personal Protection
Individual directors are the only beneficiaries of this specific portion of the insurance policy. Unlike other parts of the policy that might reimburse the company, these funds are paid directly to the officers or their legal representatives. This direct payment ensures that the money is available even if the company funds are frozen or seized.
Asset Shield
Claims against the directors that are not covered by the company can result in the seizure of homes and savings. The presence of this insurance prevents such outcomes by providing the necessary capital to settle legal disputes or pay judgments. It is a requirement for anyone serving on the board of a company with a high risk of litigation.
Indemnification Gap
Statutory limits can leave a director exposed to financial risk. This insurance fills those gaps by providing coverage.
