Directors & Officers Insurance

Why does your company need Directors and Officers liability insurance (D&O)?

Your board members will frequently require this type of coverage to protect their personal assets before joining your board. Investors will also usually require D&O coverage as part of the conditions of funding. Having employees opens management up to employment practices lawsuits - which usually can be covered under D & O insurance.

It protects past, current and future, directors and officers of for-profit or nonprofit companies from damages resulting from alleged or actual wrongful acts they may have committed in their positions. The policy provides protection in the event of any actual or alleged error, misstatement, omission, misleading statement, or breach of duty. In addition, some policies extend the same coverage to employees. To further explain - it can also be thought of as management errors and omissions coverage.

Directors and Officers Liability Insurance generally includes Employment Practices Liability (EPLI) and sometimes Fiduciary Liability. EPLI is designed to cover harassment and discrimination suits and is where the vast majority of liability exposure is.

D&O is often confused with Errors & Omissions Liability (E&O). The difference is E&O provides protection for performance failures and negligence with products and services. D&O covers lapses of the performance and duties of management. For most businesses, it is important to have coverage for both E&O and D&O.

Like to find out about how this key component of the risk management can protect your company? Give us a call.