Which statement about Directors' and Officers' insurance is FALSE?

The statement that it does not offer protection against liability for decisions made in good faith is indeed false. Directors' and Officers' (D&O) insurance is specifically designed to protect individuals in managerial roles of a corporation from personal losses in the event they are sued for alleged wrongful acts while managing a company. This insurance typically covers claims arising from decisions that directors and officers make in good faith, as well as actions taken in the best interest of the corporation.

Good faith often encompasses actions that are believed to be in alignment with the best interests of the company and its shareholders. Therefore, if a director or officer is acting within the scope of their role and making decisions intended to benefit the organization, D&O insurance can provide defense costs and settlements related to those decisions. This coverage is fundamental to encouraging responsible decision-making and promoting participation in corporate governance without the fear of personal liability, as long as the actions taken are not illegal or grossly negligent.