In Defense of the American Dream

In today’s increasingly complex economic environment, the consequences of any given business decision can cross the line and put a decision maker’s personal assets at risk.

Directors and Officers Liability Insurance

Actions brought against directors and officers based upon actual or alleged wrongful acts arising from the execution of their day-to-day duties and management functions can result in a D&O claim. D&O liability insurance protects the personal assets of directors and officers from catastrophic financial loss in the event of such a claim. The D&O policy also provides coverage for the organization.

It’s becoming more common for directors to require that a company purchase D&O liability insurance before they serve on its board. It is easy to understand why. Litigation expenses alone can amount to millions of dollars. D&O coverage can help protect the directors and officers from personal financial loss relating to these expenses.

Defense Costs - a Significant Expense

According to the Towers Perrin “Directors & Officers Liability - 2006 Survey of Insurance Purchasing and Claims Trends” defense costs are rising considerably. Costs vary greatly, depending on the source of the D&O claim. However, the average defense cost has risen from the 2004 reported cost of $370,000 per claim to an average of $800,000 in 2006.