A director's and officer's (D & O) Insurance policy provides coverage against third-party litigation. A D&O Insurance typically includes defense costs and pays certain judgments entered against officers and directors.
Generally, directors and officers are legally responsible for managing the Company's affairs and through whom the Company can lawfully act. In many jurisdictions, it is the person's role and not his title which determines whether he is a director or officer.
'Officer' and the directors will typically include 'Managers' managing the Company's affairs. The Insurance covers two sections as under: -
Company Reimbursement is the Insurance of the organization itself. It covers the Company's obligation to indemnify its Directors/ Officers to defend against any civil/criminal suit. The reimbursement is limited to only the legal costs expended.
Directors and Officers: If the action against the Directors/Officer is successful, he is on his own and is exposed to legal costs and damages awarded against him. Then the Employer Company will not indemnify him and this section comes into operation, given the Director/Officer has not acted in a deliberately dishonest manner.
