What is Directors and Officers (D&O) Insurance?
D&O Liability Insurance protects the Directors and Officers of an enterprise during a lawsuit. The charges are based on the performance of their duties and the manner in which those duties affected the enterprise. This insurance policy is designed to encourage Directors and Officers to take reasonable financial risks without paralysis by fear of judicial action.
The Directors and Officers of a company can be held liable if they damage the company by breaching their duties or contracts to the corporation, mix personal and business assets, or fail to disclose conflicts of interest. This reinforces the importance of purchasing D&O Insurance for your professional enterprise.
NOTE: D&O Insurance is not the same as Errors & Omissions Liability. D&O Insurance pertains to the performance and duties of management, whereas the latter is concerned with negligence in terms of products and services. Many companies choose to carry both forms of insurance.
When should I seek Directors & Officers Insurance?
A Board of Directors will almost always propose D&O Insurance as a priority action item. They will require it as part of their own personal risk management plans. Furthermore, Venture Capitalists will often require D&O Insurance before supplying funds. One more point applies to employees of the company. Employees sometimes engage in employment practices lawsuits, and Directors & Officers Insurance usually covers such lawsuits.
Why do I need Directors and Officers Insurance?
Insurance for D&O serves to protect the personal assets of Directors and Officers. These representatives of the company will demand a reasonable insurance policy to safeguard against financial claims made by employees, stockholders or clients. This often takes the form of harassment and discrimination suits. None of a company’s executives or board members will risk their own personal assets when a basic D&O policy can be written to protect them.
Feel free to fill out a convenient and free D&O Insurance quote form or call us at (888) 822-0688. E-mail us about your Directors and Officers Insurance needs.