Directors and officers liability insurance coverage, also called D & O insurance, protects the executive level leaders of your organization in the event of a liability claim.  This insurance is similar to errors and omissions insurance, but at the executive level.

Rather than protecting you from performance (operations) related claims, D & O insurance covers the executives and the organization itself against claims pertaining to shareholders complaints and wrongful acts claims.

If your home health care agency has a board of directors, you may be required by the board to carry this insurance coverage.  Almost any sizeable organization  carries directors and officers insurance, whether or not it is required by their board of directors

Some Claim Scenarios:

Courtesy of Philadelphia Insurance Companies

Breach of Duty of Care

Disgruntled shareholders of a technology company filed suit which sought the removal of the directors & officers from their positions on the board for misconduct and breach of duty. Allegations included embezzlement, coercion, theft, and conspiracy to convert the business assets for their own benefit. The defense cost exceeded $300,000.

Competitor Disputes

The plaintiff filed a complaint against their competitor alleging that a former employee, now working for the competition, engaged in unauthorized use of confidential and proprietary information and committed other acts of unfair competition. As a result, the plaintiff alleges it has suffered irreparable and immediate injury. In addition, the plaintiff alleges that the defendant has possession of its confidential information and intellectual property.

The plaintiff asserts causes of action for misappropriation of trade secrets, confidential information and unfair competition. Total defense costs and settlement exceeded $450,000.

Failure to Disclose

A manufacturing company received a complaint from an investor  who alleges the company improperly induced the plaintiff to issue a note payable to the company. The plaintiff specifically alleges the company made false representations and other false statements regarding the company’s forecasted rate of growth and failure to disclose its tax lien. The company defaulted on the promissory note when it failed to make the required principle and interest payments. The plaintiffs issued a demand letter and filed suit against the company. The plaintiff agreed to accept the company’s offer to convert the promissory note to stock in the company, but the defense costs exceeded $100,000.

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