Directors and Officers Liability Insurance (D&O)
Directors and officers liability insurance is a subtype of business liability insurance.
It can help protect the assets of the directors and officers of an organization and the assets of their spouses in case they are sued by employees, customers, vendors, or other parties for wrongful acts in the operation’s management.
This insurance, also called D&O insurance, can also help protect the company or nonprofit in question.
It may covers legal fees, settlements, judgments, and other expenses, so they don’t have to be paid by directors or officers personally.
What D&O Liability Covers
D&O insurance can protect organizations from an array of vulnerabilities, including:
- Misuse of company funds
- Misrepresentation of assets
- Reporting errors
- Breach of fiduciary duty
- Creditor claims
- Failure to comply with workplace laws
- Theft of intellectual property
- Poaching clients from a competitor
- Lack of corporate governance
Coverage typically includes legal defense, organizational losses, settlements, and court judgments. It may sometimes extend to criminal trial defense costs and regulatory investigations, depending on the specific policy.
Who Needs D&O Insurance?
Most organizations with directors or officers have D&O policies in case the worst happens. Regardless of the type or size of your organization, directors and officers insurance should be considered.
You may be required to have D&O insurance if your organization wishes to pursue certain types of work contracts or if you need a standard indemnification provision for your officers and directors.
Many people will not serve on a board of directors without this protection, so directors and officers insurance may help you attract the kind of board members you desire.
The independent insurance agents at Morgan Insurance can tailor a D&O policy and other business liability protection specifically for your organization.