Recent laws governing employment have opened the doors to a relatively new category of potential adversary for Directors & Officers - its own workforce. Laws such as the Americans With Disabilities Act of 1990, the Civil Rights Act of 1991, and the Family And Medical Leave Act of 1993 have contributed to a dramatic increase in claims involving not only wrongful termination, but also discrimination and sexual harassment. These laws are often poorly written and vague, resulting in considerable time and money expended in each case being interpreted by the courts. Unfortunately, statistics are indicating that plaintiffs are prevailing more times than not. In any case, it is an expensive road to travel for the defense.

Ever since entry of domestic Directors & Officers Liability Insurance in the 1960’s, there has been a lack of uniformity of policy terms and conditions. There is no standard form of D&O coverage, and at this time there are over 40 different insurers writing D&O insurance, and over twice that many different basic D&O policies.

Unlike many types of insurance, where a price comparison may be made based on similar forms of coverage, D&O policies must be analyzed and understood if they are to meet the expectations of the Directors & Officers as well as the business entity.

As much of importance in understanding what IS covered by D&O, it is also important to understand what is NOT covered by D&O.

• Arising out of the Directors, Officers, or Company gaining in fact any profit or advantage to which they were not legally entitled.
• Arising out deliberate fraudulent, dishonest, or criminal acts
• Bodily Injury or Property Damage
• Discharge of Pollutants
• Acts committed in the capacity of Director for any Outside Entity
• Acts committed as Director of a Subsidiary that occurred prior to acquisition of the Subsidiary