Directors’ and Officers’ Liability Insurance
No one likes being sued - especially not the Directors and CEOs of a company (because they have the MOST to lose). While wrongdoers and scandal-causers do deserve to be taken to court, top officials are generally the best scapegoats for huge corporate mistakes since they’re the face of the company. This means they need to bear the brunt of the risk to their reputation and personal well-being should things get blown out of proportion.
A great way to ensure the stability of your top officials, board of directors (and the company) when facing alleged claims and lawsuits is to invest in D&O Liability insurance. This coverage is an attractive attraction and retention tool as it protects directors and officers from personal losses if sued by employees, vendors, clients, or other parties for ‘wrongful acts.’ Examples where coverage may help would be alleged errors & omissions, misleading statements, neglect or breach of duty.
Who Needs D&O Insurance?
All companies whether financial institutions, public companies, private firms or nonprofits should buy Directors and Officers liability insurance coverage. If your organization operates with a Board of Directors, has vendor relationships, or is paid through government entities, it definitely needs D&O insurance. This protection is necessary because claims against companies and company leaders have become increasingly common.
While you may consider your small business or nonprofit unlikely to ever face a scandal, consider the fact that defense costs for such claims can skyrocket and you may not have the funds necessary to cover those costs. A D&O policy can help ensure your firm has the insurance needed to protect good leaders.
What Does D&O Insurance Cover?
An adequate D&O policy covers defense and settlements costs for wrongful acts or allegations against board members or upper management:
- A safety net for individual directors and officers
- Reimbursement to the organization for a contractual obligation to indemnify directors and officers that serve on the board
- Protection for the organization or entity itself
Note: Coverage only applies if the claims for wrongful acts are found to be true - if fraud is revealed, it will not be covered by a D&O policy.
Let’s Get Started
Does Your Business Need Directors & Officers liability insurance?
D&O insurance policies vary from one insurance carrier to another. Further, depending on the type of firm, coverage will be required for different types and levels of risks and exposures - there is no one-size-fits-all kind of D&O insurance policy. Developing a close relationship with a trusted insurance professional is crucial to ensuring the unique insurance needs of your firm are understood.
Carriage Trade Insurance Agency, Inc. has the expertise to get your company the protection it needs against undeserved lawsuits and allegations.