Directors And Officers Liability Insurance

Risk is something we face every single day that we live. Whether we are riding an ATV in the Alaskan Bush or jet skiing in Florida, we are going to face a certain amount of risk. This is also true in business, where directors and officers liability insurance is a fact of life.

The directors of a company are, to borrow a phrase from former US President Harry Truman, where "the buck stops". The ultimate liability with which a company contends is going to stop with its directors - the authorizing arm of a company.

Claims filed against the directors of a company arise from a variety of circumstances. Some of us are old enough to remember a community overseas that was adversely impacted by a chemical accident within the past 40 years. The company directors faced the ultimate responsibility in that case, and it is to be hoped that a lasting lesson was learned from it.

Company directors and officers have a fiduciary responsibility to their shareholders - the responsibility of managing corporate affairs both for the benefit of the shareholders and for the good of the community at large.

It is also true that there is a perception on the part of the public that a large company must have even deeper pockets, and nuisance lawsuits over such idiocies as coffee being too hot are just a small sampling of what companies face today in terms of liability issues.

Rather than take an extreme defensive posture when faced with today's litigious culture, or invest too much energy in taking personal affront at the possibility of a lawsuit, it would be well for a company to just make certain that their liability coverage is adequate to the task.

And of course, directors liability must be factored into the overall picture of liability coverage. It is a fact of today's business world and to avoid dealing with issues of liability is to behave much as an ostrich does when faced with danger - stick the corporate head in the sand, as it were, and hope the danger goes away. This will not make anything better and in fact can complicate liability issues quite considerably.