What is Directors and Officers Insurance (D&O)?
A directors and officers policy provides coverage to the insured directors, officers, trustees, employees or volunteers of the company, and or, any member of the staff, faculty, or duly constituted committee of the company. The policy provides coverage for defense costs and liabilities incurred by the insured arising out of claims alleging that an insured has committed “wrongful acts”, which means any error, misstatement, misleading statement, act, or omission, neglect or breach of duty by policy definition. This coverage specifically excludes bodily injury or property damage claims which would likely be covered by the general liability policy. This policy also provides coverage for wrongful termination(s), harassment and other employment related situations.
Top 5 Reasons why D&O Insurance is Important for Privately held companies?
Any claims made from stockholders, employees, and clients will be made against the association, AND against the directors of the company. Rather than being held personally responsible for acts of the company, most directors and officers will demand to be protected rather than put their personal assets at risk.
D&O gives the organization the ability to attract the best possible outside directors. 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. D&O coverage will protect the assets of the spouses, heirs and estates of the Directors and Officers.
Employment practices suits constitute the single largest area of claim activity under D&O policies. Over 50% of D&O claims are employment practices related.
D&O coverage can fill in gaps left by a commercial general liability policy.
Competitor Claims (Anti-trust, Unfair trade practices)