Board Room

Private Companies and Directors and Liability Insurance

Public companies, for the most part, understand their need to carry directors and officers (D&O) insurance in order to protect executives working for their firms and offices. Managers at some private, closely held companies hold firm to their belief that this particular coverage is not always necessary. They truly feel that they are unlikely to ever be involved in a lawsuit of this nature and forgo obtaining directors liability insurance.

The fact is that private companies are constantly being sued, and quite often for events that are outside the scope of their general liability coverage, or fiduciary liability policies. Executives that have been involved in claims of this sort know better. Unfortunately, many company officials have to learn by their mistakes and often wait until it is too late to invest in directors and liability insurance.

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