Courts will allow

creditors to "pierce the corporate veil" and seize personal assets where it is found that the corporation has not followed the formalities required of a corporation.

Board Member Liability

The fact is, people form corporations so that they can undertake risky activities without having to face personal liability in case there is a lawsuit. Normally directors and officers are immune from liability for corporate acts, and, as a general rule, courts will allow corporate creditors to seize only corporate owned property.

However, the courts will allow creditors to "pierce the corporate veil" and seize personal assets where it is found that the corporation has not followed the formalities required of a corporation.

This most often occurs when:

• The corporation takes actions without the board of directors having granted formal authority
• Corporate assets have not been segregated from the assets of directors. Example, the corporation uses office space owned by a director without a board-authorized lease, or the corporation pays debts using a director's credit card.

Does your corporation have a Directors & Officers policy? If so, are its limits sufficient to prevent your personal assets from being seized in the event of a major court judgment against your organization? Also, many common, frivolous legal claims may qualify as exclusions in your existing policy – for example, claims of sexual harassment or molestation are usually excluded from traditional business insurance policies.

XINSURANCE policies are structured to cover the gaps and exclusions that exist in current policies, and to cover you in the event your D&O policy is insufficient or non-existent. And because XINSURANCE acts as supplemental insurance coverage, the premiums are low and affordable…but your peace of mind will never be greater.

Click here to speak with an underwriter.