Michael J. Lambert
Phone: 603.627.8137
Fax: 603.641.2373
mlambert@sheehan.com
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How can I protect myself financially from claims made against me as a director or officer of my company?
Monday, July 31, 2006
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Directors and officers (D&Os) generally have two sources of protection from claims made against them for alleged wrongdoing: indemnification from their company and D&O insurance, although this contractual protection may not always be available. Public policy considerations, a change in the composition of the board of directors, modification of the indemnification provision, or even the insolvency of the company could leave D&Os without coverage from the company for defense costs, settlement or judgments. D&O insurance usually serves as a backstop when there is no contractual indemnification from the company.
D&O policies are unique and create complex legal issues. Unlike other "common form" insurance policies, each insurer has its own form with many variations and types of coverage. Insurers will also negotiate coverage enhancements not contained in the standard policy. A company should retain qualified advisors and devote appropriate time and resources to tailoring coverage.
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