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directors and officers insurance

What is Directors and Officers Insurance?

Directors and officers insurance protects board members and officers against legal expenses if they are sued for a decision they made on behalf of the company that led to a financial loss.

    Why Do You Need Directors and Officers Insurance?

    Any company or nonprofit organization that has a board of directors should consider directors and officers insurance (D&O), a type of management liability insurance. D&O protects board members from lawsuits over decisions they make while serving on your board. If they’re sued, they could have to pay thousands of dollars in legal costs.

    Securing this insurance policy protects your board members and the officers they elect or appoint. It helps your small business attract and retain top talent since they know they’ll be protected. Most board members will expect your business to carry this policy.

    What Does Directors and Officers Cover?

    Directors and officers liability insurance (often shortened to D&O Insurance) protects individuals, their spouses, and their personal assets from losses if there are claims made by employees, competitors, investors, customers, or vendors for actual OR alleged wrongful acts while they manage a company or organization, such as:
    • Breach of fiduciary duty
    • Lack of corporate governance
    • Misuse of company funds
    • Failure to comply with workplace law
    • Accusations of reporting errors

    This business insurance covers legal fees and other defense costs. It also typically applies to the company or organization.

    Directors and officers coverage may also be bundled with business insurance called employment practices liability insurance (EPLI) as part of a management liability insurance policy. This insurance covers claims brought against the company by employees for allegations like discrimination and wrongful termination. Bundling the two may be more affordable coverage for a business.

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