In today’s business climate of corporate transparency and accountability, organization’s as well as directors and officers face a myriad of employment-related exposures. That means investing in business insurance is essential for businesses of all sizes.
Protect Your MVP’s
Regardless of your company’s size, the legal cost to defend your entity, as well as directors and officers, are substantial, as are the potential penalties that can be personally incurred. Due to the personal liability risk (not covered under a personal insurance policy), protecting the board can be a challenge.
To help ensure both your officers’ and the company’s well-being, a directors and officers insurance (D&O) policy is part of a comprehensive risk financing strategy.
What Protection Does It Offer?
Unlike a commercial general liability insurance (CGL) policy that provides coverage for claims arising from property damage and bodily injury, a directors and officers (D&O) business insurance policy could provide coverage for a “wrongful act,” such as an actual or alleged error, omission, misleading statement, neglect or breach of duty.
A D&O policy provides defense costs and indemnity coverage to the entity listed on the policy, which may include:
- Coverage for individual directors and officers
- Reimbursement to the business for a contractual obligation to indemnify directors and officers who serve on the board
- Protection for the organization or entity itself
Indemnification provisions are typically included in the bylaws of the organization. While these are an important risk component, small to midsize privately held companies often do not have the financial resources to fund the indemnity provisions, making the bylaws hollow. A D&O policy could provide an extra blanket of security in the event of a covered loss.
A “fraud” exclusion is typically included in a D&O policy, which eliminates coverage for losses due to dishonest or fraudulent acts or omissions, or willful violations of any statute, rule, or law. There are many additional forms of business insurance coverage to adequately protect directors and officers, including:
- Entity coverage
- Payment priority for insured persons
- Severability of the insured as well as severability of the application
- Coverage over time—for past, present, and future directors and officers
- Pay on behalf clause
The next step is easy!
Call us today at (732) 649-1600 to learn how our advisors could get you the right Directors and Officers Insurance coverage, at the right price, and superior service. You can also Request A FREE Insurance Quote on our site or Contact an advisor for more information.