Directors and Officers Liability Insurance typically covers errors/omissions committed by corporate officers. Which best describes this coverage?

• A. Wrongful acts
• B. Liquidity management
• C. Property damages
• D. Net income

Answer: (A)

Wrongful acts. Directors and Officers Liability Insurance is built to protect individuals in governance roles from claims that arise from their management actions. It covers allegations such as errors or omissions in decision-making, breaches of fiduciary duty, misrepresentation, or other improper acts committed in their official capacity. This is distinct from property damages, which are handled by property or general liability insurance, and from financial metrics or cash-flow topics like net income or liquidity management, which aren’t the kinds of acts D&O covers. When a claim arises from a misstatement in a financial report or a breach of duty to shareholders, the policy steps in for defense costs, settlements, or judgments up to the policy limits. So, the coverage best described is wrongful acts.