Directors and Officers Liability Insurance
Under the common law, and under the statutes of most jurisdictions, directors and officers owe certain duties and standards of care in managing the affairs of the corporation they serve. Basically, directors and officers must discharge their duties with the care and skill of a reasonably prudent person. If failure to perform these duties with due care results in financial damage to the corporation, the negligent director or officer can become personally
liable to make restitution to the corporationís stockholders. Or, under different circumstances, directors and officers can become liable to parties outside the corporation, such as creditors or competitors, as a result of their mismanagement.