Directors & Officers Liability Insurance – D&O insurance
What is it
Directors and Officers liability insurance also known as D&O Insurance provides coverage for the company, its directors, managers and officers, and employees, for suits alleging that their decision making caused financial harm. It can also pay for legal defense, even when there hasn't been any wrongdoing.
why do i need it
Directors & Officers Insurance protects your company and the directors of your company against claims from stockholders, employees and clients. Since a director can be held personally responsible for acts of the company, most directors and officers will demand to be protected rather than put their personal assets at stake. In addition, investors and members of your board of directors will not be willing to risk their personal assets to serve as a corporate director or officer, no matter how heartfelt their belief in your company. Finally, employment practices suits constitute the single largest area of claim activity under D&O policies. More than 50% of D&O claims are employment practices related.
Who needs it
All types of organizations, whether they are public, private and non-profit, and the individuals who make decisions are at risk to potential claims related to D&O exposures. Directors and Officers Insurance protects against claims for securities litigation, regulatory actions, and allegations of misrepresentation and breaches of fiduciary duties.
Can I be held personally liable for claims as a volunteer board member?
It depends on provisions in your organization’s articles of association or incorporation. However, liabilities which aren’t covered by your organization or corporation can be covered by D&O insurance.
Are there any exclusions in my D&O Insurance Policy?
While D&O insurance will provide coverage for defense expenses, financial damages, and settlements, it will not recover wages, fines, taxes, penalties, or multiplied damages. Any claim related to unlawful activity will also not be covered with a D&O policy.
When do claims need to be reported for a potential D&O insurance claim?
Claims should be reported as soon as you become aware of a potential claim.