What kind of insurance addresses liabilities of directors and officers in an organization?

Directors and Officers Liability Insurance (D&O insurance) specifically protects the personal assets of corporate directors and officers in the event they are sued for alleged wrongful acts while managing a company. This type of insurance is crucial because it covers claims made against company executives for issues such as mismanagement, breaches of fiduciary duty, and other related legal liabilities, thereby encouraging capable individuals to serve on boards without the fear of personal financial loss.

In contrast, professional liability insurance primarily covers professionals against claims of negligence or failure to perform their professional duties, rather than the broader scope of director and officer actions. General liability insurance focuses on bodily injury and property damage claims from third parties and does not cover the unique risks associated with management decisions. Commercial liability insurance, like general liability, addresses exposure related to business operations rather than the actions of directors and officers specifically. Thus, D&O insurance is uniquely tailored to meet the needs of those in leadership positions within an organization.