If your business is hiring new executives or board members, they might ask you if you carry directors & officers (D&O) insurance. If you don’t know what this coverage is, it’s worth investigating. It might help company directors in a targeted, personal way. Let’s look into the benefits of this coverage, and why it’s so important for company leaders.

With D&O insurance, you can provide key players with more specific liability coverage. Therefore, you’ll often create more company accountability for your talent.

How does D&O insurance work?

D&O insurance protects executives boards and the like against the harm they cause others. But you might wonder why your business needs this coverage? Doesn’t your general liability insurance cover all those working in the business?

Yes, the general liability insurance within your business will protect employees. However, it might not protect them on a personal level. To directors, personal might prove the key word in the event of a liability suit. They might have to turn to the extra coverage in a D&O policy. It’s there in case a director faces an individual allegation of misconduct.

Let’s say that in a lawsuit the plaintiff names both the business and its directors as at-fault in the deal. Because the director is a target of the lawsuit, they might stand to lose assets personally in the deal. In this case, a D&O insurance policy will apply to those individual, personal losses. Thus, it might help cover certain gaps not included in a general liability policy.

The Ability of Policies to Compensate

Directors can turn to D&O insurance in a few different ways.

• Coverage can eliminate disputes between company and directors when both parties become involve in suits.
• The affected party can receive compensation for their personal losses.
• If the business must compensate the affected director, the policy can help the business keep their own finances in line.

With these policies, directors can get protection following claims like:

• Allegations of harassment or poor employment practices
• Stock performance lawsuits
• Allegations of mismanagement, misappropriation or misuse of funds
• Failure to follow regulations
• Failure of duty to the company

Most directors consider this protection critical to be able to do their jobs. As a result, many even ask that a business supply the coverage before they will accept a job offer. So, don’t hesitate to investigate the practical need your business has for D&O insurance.

We’re here to help you determine the type and amount of D&O protection you need. We’ll also help you tailor your policy directly to your directors. That way, it will balance with your existing liability coverage without neglecting critical protection.