D & O Insurance

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Why is D and O Liability Insurance Important ?

Question
We are a chapter of a National Organization. Do we need D & O insurance for our board members and how do we get that.
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High profile failures such as Enron, WorldCom, Equitable Life and Independent Insurance Company and closer to home Satyam have highlighted the role of directors and officers in many corporate failures. Ernst & Young's recently successful defence of the claims made by Equitable Life also leads to conclusion that if the auditors of a company are not liable for the poor decisions of its directors then the only people to blame must be the directors themselves There remain significant differences in the D&O Policy available in the market although the coverage has certain fundamental features. 

Essentially, a D&O Policy covers individual directors and officers against wrongful acts in their capacity as directors and officers.  The property of the spouse also gets protected provided the claim against the spouse arises not from any wrongful act of the spouse but as a result of the wrongful act of the director or officer covered in the policy

The cover is not for the benefit of the Company as such, though there are extensions available to cover the company in certain areas, like claims against harassment by the employees.

D&O policies are usually split into three types of coverage:
Coverage for the directors, officers or other employees acting in a supervisory or managerial capacity in the company for wrongful acts committed in their capacity as employees of the company

 Coverage for the company to the extent it is permitted to indemnify its directors and officers against whom legal action has been taken

Coverage for the legal costs incurred by the directors and officers in attending    or defending proceedings, investigations or inquiries. This includes their own costs or costs awarded against them.