Ten Mistakes In Buying D&O Insurance

Writing in Kevin LaCroix’s D&O Diary, King & Spalding attorney Michael J. Biles draws on his experience defending officers and directors of public companies in securities litigation, reminding readers that while the core of a D&O policy is generally standard, it’s possible to negotiate endorsements, and it’s advisable to do so. His list of ten common mistakes translates into practical and concrete advice. Make sure, he says, that the policy limits are in the “Goldilocks range” for your particular company and risk profile – not too much or too little. He suggests ways to determine what that range is, but he adds that in any case he “would not be an officer or director of any company – no matter how small the market capitalization – that had less than $10 million in D&O limits.” He also discusses common gaps and the important of “side A coverage,” among other items, and he finally cautions about a pitfall that could leave company attorneys, of all people, out in the cold. Make sure, he says, “that the definition of ‘Insured’ expressly includes the general counsel and other in-house counsel.”