What is the main purpose of a directors and officers liability policy?

The primary purpose of a directors and officers liability policy is to protect the personal assets of corporate directors and officers in the event that they are sued for alleged wrongful acts while managing the company. This coverage is crucial as it helps shield these individuals from financial ruin due to claims of mismanagement, breaches of fiduciary duty, or other related allegations. Maintaining the integrity of personal finances allows directors and officers to make decisions that benefit the company without the fear of personal financial consequences.

While corporate liabilities, regulatory fines, and employee disputes are relevant, they are not the main focus of a directors and officers liability policy. This policy specifically addresses the unique risks faced by individuals in leadership positions rather than the organization as a whole or general corporate issues.