Often, business disputes or other commercial litigation involves not only the organization itself but also its leadership.
In many types of litigated commercial disputes, a plaintiff will sue the business, its board of directors and its officers.
In other cases, the whole point of a business lawsuit is that the person who filed it believes directors or officers behaved negligently or in a way contrary to the law.
To respond to this circumstance, many commercial insurance carriers offer what is called Directors and Officers, or D & O, insurance.
As the name implies, D & O insurance protects a business organization’s leadership from business-related claims lobbed against them personally.
Without this protection, a well-intentioned business leader could wind up paying hefty legal fees and perhaps even a court judgment out of their own pocket. A serious case could leave their families and them facing financial hardship or bankruptcy.
The standard D & O policy also offers protection to a business organization. Many times, the organization will have a legal obligation to protect their leadership from business-related lawsuits. D & O insurance will defray these costs and expenses.
It is common for business leaders in the Dallas area to face a lawsuit. Even when leaders thought they were acting ethically, there are a wide range of legal matters that could draw them into a lawsuit and put their family’s personal assets and income at stake.
There are legal issues related to D & O coverage
The topic of D & O insurance often raises its own set of legal questions:
- Business leaders and the organization itself may have to negotiate over whether D & O coverage will be available and in what amounts.
- Assuming there is coverage, in the event of business litigation, there may be disputes with the insurance carrier over the carrier’s responsibilities to pay a claim or mount a defense against allegations.
- Importantly, the insurance carrier that has a duty to defend a business or business leaders will want to make sure that their insureds are vigorously defended against claims.
Vigorously defending a business leader will often require a detailed knowledge of Texas or federal law as well as a keen attention to the details of the case.