Directors & officers liability insurance, or "D&O," provides coverage for the directors and officers of a business if they are sued in conjunction with the performance of their duties as they relate to the company. You’ll need D&O insurance as soon as you assemble a board of directors.
D&O liability insurance can usually include employment practices liability and sometimes fiduciary liability. Fiduciary involves harassment and discrimination suits, and is where the majority of your exposure will be.
D&O insurance is necessary because:
- Claims from stockholders, employees, and clients will be made against the company and against the directors of the company. Since a director can be held personally responsible for acts of the company, most directors and officers will demand to be protected rather than put their personal assets at stake.
- Investors and members of your board of directors will not be willing to risk their personal assets to serve as a corporate director or officer, no matter how heartfelt their belief in your company.
- Employment practices lawsuits constitute the single largest area of claim activity under D&O policies. Over 50% of D&O claims are employment practices-related.
Be careful not to confuse Directors & officers insurance with errors & omissions liability ("E&O"). Errors & omissions is concerned with performance failures and negligence with respect to your products and services, not the performance and duties of management.
Directors and officers are the leaders of your business. Protection of their well-being will ensure a prosperous future for your company. Protect your business – call us today or fill out our quick and simple directors & officers insurance quote form to learn nore!