Corporations and not-for-profit organizations in the New Jersey area must provide financial protection for the costs of legal actions that may be brought against their Boards of Directors and management teams. In many cases, corporate indemnification may not provide complete protection for these directors and officers.
Additionally, the corporation may wish to protect its own assets in the event of a lawsuit. Therefore, many firms purchase a New Jersey Directors and Officers Liability Policy (or D&O policy) to cover the cost of the indemnification provided by the corporation or to pay claims on behalf of the directors and officers when the corporation is not providing indemnification.
There is no standard form for New Jersey Directors and Officers Liability policies. While all policies have certain typical conditions and exclusions, each insurer uses its own policy wording and there can be differences in coverage conditions, deductibles and exclusions. Some of the issues that may need to be addressed when structuring a D&O Policy include:
- Entity Coverage
- Employees as Insureds
- Insured v. Insured Exclusions
- Right/Duty to Defend
- Prior Acts Coverage
- Advancement of Defense Costs
