Directors & Officers Liability Insurance

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.

Fiduciary liability and employment practices liability can also be included.

Fiduciary Liability - Fiduciary covers claims that involve the violation of the Employee Retirement Income Security Act, or ERISA. If a manager, for example, violates the financial obligations of ERISA, having the right coverage can protect your company if held liable in situations from imprudent investments to failure to enroll employees.

Employment Practices Liability - With proper insurance, your business can be protected if a worker claims that his or her rights have been violated. This can include violations from sexual harassment and discrimination to violations of the Americans with Disabilities Act (ADA), mismanagement of employee benefit plans, and wrongful termination.

Helpful Risk Management Resources

• 5 things to know about Side A D&O coverage
• D&O policy elements and exclusions risk managers need to know
  

Get started today!

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.