For any business that is incorporated and has a board of directors and corporate officers, the many risks and exposures that such a company inherently assumes could expose them to lawsuits from their shareholders, who may sue alleging that the directors have committed acts that ultimately reduced the corporation's value. Lawsuits could also possibly arise out of employee practices, allegations of conflicting interests, and from providing information to the investing public.
Decisions made by Directors & Officers in PA can certainly impact the viability and value of any Pennsylvania corporation, which is why the need for insurance protecting the company in the event of a lawsuit is so vital. The current issues of accounting practices, financial reporting and the use of corporate assets have resulted in an increase of lawsuits being filed against executive boards.
D&O coverage should be considered a necessity
D&O coverage supplements the protection provided by General Liability policies (since the former responds to legal actions filed by shareholders, customers, scorned merger partners, and creditors). Steps should be taken by corporate directors to ensure that D&O coverage is in place, and boards should also determine the amount of coverage currently available for handling defense costs.
It is important to note that D&O Insurance does not cover criminal acts. However, the cost of providing a legal defense until criminality is determined may well be covered. While it was once common for a director facing a lawsuit to have any related expenses handled by a corporation's operating funds, such agreements have little value today, especially with an operations facing bankruptcy or for those that cease operating altogether.
Like any other type of insurance transaction, a business has to complete an application and this can cause problems that could affect possible coverage. When seeking D&O coverage, the applicant has to provide detailed information about its operations, including details on future business plans (mergers/acquisitions), capital financing activities and involvement with professional services. Furthermore, such applications require information on litigation (past and pending) involving board members as well as on the nature of the legal disputes.
Corporations in need of protecting their Directors & Officers in PA must be willing to provide detailed financial information to their insurers. Many businesses are obviously concerned over the need to protect this vital data, but in order to secure this coverage the information is, in all instances, mandatory. The stakes for insurance carriers are simply too high.
Decisions made by Directors & Officers in PA can certainly impact the viability and value of any Pennsylvania corporation, which is why the need for insurance protecting the company in the event of a lawsuit is so vital. The current issues of accounting practices, financial reporting and the use of corporate assets have resulted in an increase of lawsuits being filed against executive boards.
D&O coverage should be considered a necessity
D&O coverage supplements the protection provided by General Liability policies (since the former responds to legal actions filed by shareholders, customers, scorned merger partners, and creditors). Steps should be taken by corporate directors to ensure that D&O coverage is in place, and boards should also determine the amount of coverage currently available for handling defense costs.
It is important to note that D&O Insurance does not cover criminal acts. However, the cost of providing a legal defense until criminality is determined may well be covered. While it was once common for a director facing a lawsuit to have any related expenses handled by a corporation's operating funds, such agreements have little value today, especially with an operations facing bankruptcy or for those that cease operating altogether.
Like any other type of insurance transaction, a business has to complete an application and this can cause problems that could affect possible coverage. When seeking D&O coverage, the applicant has to provide detailed information about its operations, including details on future business plans (mergers/acquisitions), capital financing activities and involvement with professional services. Furthermore, such applications require information on litigation (past and pending) involving board members as well as on the nature of the legal disputes.
Corporations in need of protecting their Directors & Officers in PA must be willing to provide detailed financial information to their insurers. Many businesses are obviously concerned over the need to protect this vital data, but in order to secure this coverage the information is, in all instances, mandatory. The stakes for insurance carriers are simply too high.
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