Directors & Officers Liability (D&O)

Protecting Your Business

Directors & Officers Liability Insurance
What It Is…

Directors and officers liability insurance is business insurance that protects directors and officers from realizing personal losses in the event that they are the subjects of lawsuits. A qualifying lawsuit would be one that targets the director or the officer of an organization. The protection would apply to the person’s legal bills and other costs.

Who It Is for…

If you are a director or an officer in a nonprofit organization or other type of organization, this is the type of insurance that would benefit you. If your company is public, you may purchase directors and officers liability insurance for your directors and officers. Private companies also decide to purchase this insurance if their companies or directors and officers are the subjects of lawsuits.

How It Works…

Directors and officers liability insurance coverage allows those who serve as directors and officers the ability to perform their duties without concerns about lawsuits. The policy pays either the directors and officers or the company if someone files a civil lawsuit against them. This coverage would also apply if the director, officer or the company are accused of criminal wrongdoing or are the subject of regulatory investigations.

Different Types of Coverage in Existence…

Directors and officers liability insurance can include three types of coverages. The first can cover directors, officers and employees if lawsuits are filed against them as was mentioned above. There is also coverage for the company in the event that its directors, officers and employees experience losses. The last type of coverage is known as “entity coverage,” and it protects the financial interests of the company.

Major Benefits…

The fact that directors and officers liability insurance reimburses the company’s directors and officers for financial losses is not the only benefit of having this type of policy. If you have this type of policy, the people you want to bring to your company to serve as officers and directors will be more likely to agree to do so if you have a policy that protects them from lawsuits. Also, private equity firms are more likely to invest in your company if you have this type of coverage.