In November 2021, a $237.5 million claim settlement was paid out by current and former Boeing Company directors to resolve claims that these individuals of the company ignored safety issues concerning Boeing’s 737 MAX aircraft. According to The National Law Review, the Boeing settlement ranks as one of the largest derivative settlements to date. However, the good news in this case is that the personal assets of the directors and officers named in the lawsuit won’t be impacted, as the entire settlement is to be funded by the company’s D&O insurers.
What this recent court case has yet again demonstrated is that public companies shouldn’t overlook purchasing sufficient directors and officers liability insurance – and should be especially diligent when it comes to Side A coverage. As noted by NLR, D&O liability Side A coverage is critical for protecting a company’s officers and directors who are implicated in securities class actions, enforcement actions, derivative claims and the like. And because so many states are now prohibiting companies from indemnifying their directors and officers for payments made to the company in stockholder settlement claims, coverage has become even more vital.
Simply put, Side A of a D&O liability insurance policy protects individuals for non-indemnified losses. If a company has not indemnified its directors, officers or other executives, Side A — also referred to as personal protection coverage — protects the financial assets of these individuals in the event of a liability claim. Common claim examples include alleged breach of duty, errors and wrongful acts. By providing “first dollar” coverage, Side A of a D&O policy isn’t subject to any retention or deductible when it comes to defense and settlements in the event the company is unable to provide indemnification in a D&O claim situation.
Claims brought against a company’s directors and officers can be significant. If your company is a public company or a private company planning to go public, the experts at Oakwood D&O can help you mitigate liability risks with the right D&O insurance policy.
Selling your D&O book of business?
Are you a company or broker with a quality book of D&O business that you are planning to sell? Oakwood D&O is currently expanding its book of business and market reach by acquiring D&O business accounts. With proper due diligence and favorable agency terms, we can ensure a smooth transfer of business when you’re ready to move forward.
Get in touch: Email Eli Solomon, CEO, at email@example.com or call 323-686-7519. You can also follow Oakwood D&O on LinkedIn.