General Lines Property and Casualty Insurance Practice Exam 2025 – Your All-in-One Guide to Mastering Insurance Certification!

Directors and officers (D&O) liability insurance is specifically designed to protect the personal assets of corporate directors and officers in the event they are sued for alleged wrongful acts while managing a company. This coverage is crucial because it addresses claims made against these individuals for decisions made in the course of their duties, including allegations of mismanagement, breach of fiduciary duty, or failure to comply with regulations.

The nature of D&O insurance focuses on the protection of the individuals holding these key positions within a corporation. It does not cover the company itself or its assets; instead, it safeguards the personal financial interests of directors and officers from claims that could arise from their leadership roles.

Other options are relevant to different types of insurance. Fire damage to corporate buildings may be covered by property insurance, personal liability of employees would generally be addressed in a general liability policy, and property damage caused by directors may fall under different types of liability coverage, but none of these pertain directly to the specific focus of D&O liability insurance. Thus, the coverage of claims against corporate directors and officers is the accurate definition of what D&O liability insurance provides.