Directors & Officers Liability Insurance, commonly known as D&O, helps cover defense costs and damages (awards and settlements) arising out of wrongful act allegations and lawsuits brought against an organization’s board of directors and/or officers.

Key Points to Consider When Purchasing Directors & Officers Liability Insurance

Why Would I Need This Coverage?

Any for-profit, or non-profit organization with officers, or board of directors needs to have this coverage. D&O protects these individuals from the potential of being personally liable for an incident involving the organization.

What Is Covered?

D&O Coverage will pay claims up to the policy limit selected by the organization. Some examples of claims are: A. Organization was sued for $450,000 for violating a non-compete agreement with a competitor. B. An assistant to the CFO was terminated for divulging information about impending layoffs at the company. The assistant sued for retaliation and sexual harassment claiming the CFO always made suggestive comments to her. C. A donor sued a non-profit organization for not using their donation on a project they earmarked the funds for.

What Limits Should I Have?

Smaller organizations usually have a $1,000,000 limit. However, the amount of coverage you have will be based on the size of your organization.

Is D&O Coverage Expensive?

In most cases, a small business can obtain a policy around $750 for the year. Larger organizations will be rated on their revenues, number of employees, business type, and how many board members.

What Else Should I Look For In A D&O Policy?

You should work with an Insurance Carrier that specializes in Directors & Officers Insurance. Typically, they have better coverage and lower premiums. Look for a policy to provide defense costs in addition to your policy limits. This simply means your legal defense will be unlimited in the event of a claim. The broad definition of a “claim” would be to allow any EEOC or DOL investigations to be covered under your policy. Make sure your deductibles and retention limits are acceptable. The bottom line is to use an insurance agent that is experienced writing D&O Coverage.