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Bad Judgment?

Even top execs can make mistakes. With the right coverage, it's no problem.

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This story appears in the September 2003 issue of Entrepreneur. Subscribe »

Savvy entrepreneurs hire smart executives to run their companies--but what happens if one of those directors or officers makes a mistake and you get sued? With directors and officers (D&O) liability insurance, you--and they--are protected.

According to Anita Setnor Byer, president of Setnor Byer Insurance & Risk in Fort Lauder-dale, Florida, D&O "covers directors and officers against wrongful acts typically described as bad business judgment." Such acts are not covered under your general liability insurance. "The exposure of directors and officers is separate and distinct, because they are stewards of the enterprise," Byer says.

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