Directors and Officers (D&O) insurance protects those in senior leadership at an organization from personal loss that may arise if they’re sued as a result of their role.
D&O insurance is typically tiered as Side A, B, and C coverage – with Side A offering individuals protection regardless of how their company is covered.
Side A coverage is important for directors and officers for claims where their company fails to or is financially unable to pay for indemnification. This may happen if the company is legally unable to pay due to corporate law or financial insolvency. In this case, the individual director/officer is still protected.
With Side B coverage, coverage responds for the company to the extent indemnification by the company is available.
Side C coverage is also known as "entity coverage," which includes the company itself as an insured in the policy. Choosing D&O coverage depends on industry, company size, and risk levels. Leaders may be vulnerable to lawsuits from employees, vendors, competitors, investors, customers, or other parties.