What Are the Key Differences Between Directors & Officers Insurance and Personal Guarantee Insurance?
Directors & Officers (D&O) Insurance protects company directors and officers from personal liability arising from lawsuits related to their management decisions. It covers legal costs and settlements for wrongful acts.
Personal Guarantee (PG) Insurance protects individuals who have personally guaranteed business loans or leases. It covers a portion of the debt if the business defaults, easing the financial burden on the guarantor.
Key differences:
• Scope: D&O covers management actions, while PG covers personal guarantees.
• Beneficiaries: D&O benefits directors, officers, and sometimes the company; PG benefits only the guarantor.
• Coverage: D&O covers legal costs and settlements; PG covers a portion of the guaranteed debt.
• Risk Types: D&O addresses management risks, while PG addresses financial risks from personal guarantees.
Businesses and individuals need to understand these differences to choose the appropriate insurance coverage for their specific needs and exposures.
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