When directors and officers are sued by a large number of parties who interact with a business—including employees, customers, investors, competitors, and vendors—they and their spouses require protection from directors and officers (D&O) liability insurance. Through their company management, nearly every act they commit while on the job can be construed as wrongful either in actuality or allegedly.
Standard indemnification provisions cite directors and officers as bearing no responsibility for losses as a result of their roles within their companies. But the company itself must be indemnified against the costs of defending its directors and officers via D&O insurance, and many of these employees want the protection of two layers of indemnity.
