By now, most directors and officers are aware that last month the Deputy Attorney General set forth new policy for the U.S. Department of Justice that may significantly increase the risk of personal liability for individuals based upon alleged corporate misconduct.
In order to safeguard their interests, directors and officers should focus on the scope of the insurance purchased to protect their interests, as well as the company’s interests, in the event the government commences an investigation into the company’s conduct. It behooves directors and officers to take every step to ensure that the directors’ and officers’ insurance policy (D&O insurance) purchased by the company is sufficiently broad to provide coverage for their individual interests and the risks to which they are exposed because of the leadership position they have assumed at their company. While these insurance issues are not new, the shift in DOJ policy brings the potential insurance pitfalls into sharper focus and may result in disputes regarding coverage in circumstances that previously were of lesser concern.
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