Personal Directorship Liability

Serving Others While Protecting Your Family

Being asked to serve on a company's board of directors is an honor. But it is a danger. All boards -- big and small, public and private, for-profit and not for-profit -- are held to the same legal standard. So whether you are on the board of your local community chest or a Fortune 500 company, your personal assets are at risk.

Before you serve on a board, you need to make sure that the entity has appropriate indemnification and adequate insurance in place to protect you. But that is not enough.

To properly protect yourself, you need a policy that covers you and your family; a policy that is not shared with other board members or that can be taken away from you when you need it most because of the actions or failures of others.

You need Personal Directorship Liability Insurance.

At Owens Group, we have multiple avenues available for providing you and your family with this critical coverage. In many cases, we can add the coverage for you under your own personal insurance coverage for a nominal additional premium. Where necessary, we can also obtain a stand-alone policy for you that will cover your charitable and for-profit board activities.

With evolving legislation and stricter corporate governance standards, you simply can’t afford to ignore the issue.

Coverage Features may include the following:

■ Comprehensive independent directorship coverage— Personal Director’s Liability Insurance protects the insured person’s personal assets for each independent directorship that he or she chooses to designate for insurance purposes.

■ Protection designed solely for the insured person— Personal Director’s Liability Insurance policy provides a dedicated limit to help protect the personal assets of the individual.

■ Broad definition of directorship—Insured directorships can be at publicly traded, privately owned, or not-for-profit corporations.

■ Last line of defense protection with no retention—Coverage applies for loss excess of any other insurance and indemnification from any source but before an insured person taps into his or her own assets. This can occur when the underlying insurance is financially unable to pay, has been rescinded, or coverage is precluded by breach of a non-severable warranty or is deemed part of the corporation’s bankruptcy estate and the corporation is unable to indemnify.

■ Drop-down coverage—Coverage under Personal Director’s Liability Insurance policy applies on an excess basis over existing D&O liability insurance coverage that the corporation already owns. But in the event indemnification is unavailable and the underlying D&O liability insurance coverage proves to be uncollectable, the Personal Director’s policy drops down to apply.

■ Freedom to choose defense counsel—Often the insured director can choose defense counsel.

■ Spousal coverage— Personal Director’s Liability Insurance policy insures executives as well as their spouses or domestic partners if they are named as co-defendants.

■ Policy limits of up to $10 million are available—Limits of up to $10 million in any one policy year are available.