Directors & Officers Liability Insurance
Directors & Officers Liability Insurance Information
What is D&O insurance?
Directors and officers liability insurance covers a company’s directors and officers for claims made against them. Also known as D&O insurance, the policy protects against allegations of wrongful acts when acting as company executives. Wrongful acts may consist of misstatements, errors, breaches of duty and more.
D&O insurance is recommended for publicly traded companies, for-profit businesses, privately held firms, not-for-profit organizations and educational institutions with a corporate board or advisory committee. Many investors and board members may refuse involvement unless this protection is in place.
What are the benefits of D&O insurance?
Employees, stockholders and customers are able to make claims against a company and its directors. Whether grounded or frivolous, the resulting legal expenses and reputation damage can be extensive. Directors and officers can be held responsible for the acts of a company, which puts their personal assets at risk.
D&O insurance protects companies and their officers from criminal, civil and regulatory proceedings from allegations of wrongful acts.
There are 3 sides of directors and officers insurance that can be paired in different ways to provide coverage for a business or nonprofit.
- Side A: This directly covers directors, officers, and employees. For example, if a board member is sued, the policy may provide coverage for defense costs, settlement fees, or judgements for that individual. This is usually if the corporation can't indemnify them.
- Side B: This indirectly covers directors and officers by compensating the company or organization for claims paid on the board member's behalf. For example, if a board member is sued and the nonprofit covers all legal expenses for that member, side B coverage may compensate the nonprofit for those expenses.
- Side C: Also known as "entity coverage," this eliminates disputes of coverage allocation when both the directors and officers and the insured organization are named as co-defendants in a securities lawsuit.. For example, if the nonprofit corporation itself is sued in addition to a board member for certain claims, side C may cover the nonprofit's own legal costs.
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Protect your company’s interests. Call us at (877) 868-8063 or (281) 395-5497learn more about the benefits of D&O insurance. We will discuss you needs and search for a policy that best matches your business’s needs.