Directors and Officers Insurance

Understanding Directors and Officers Liability Insurance

Your board of directors and/or company officers are responsible for making important decisions for your business every day. And with that kind of responsibility comes high risk for your business and livelihood. If and when claims are made against a member of the board or the entire board of directors, directors and officers insurance can offer you protection.

What Directors and Officers Insurance Typically Covers

Directors and officers insurance is a type of liability insurance that covers against acts, omissions, and misstatements made on behalf of your organization. Some examples of potential claims may include (but are not limited to):

  • Suits brought on by shareholders over company performance
  • Disputes related to authority of board members/officers
  • Failure to comply with laws/regulations
  • Employment practices
  • Regulatory claims
  • Cyber liability

The payout from an insurance claim may be paid directly to the directors/officers or to the company, itself. The payout may be made as reimbursement of losses or as an advance for defense costs. It may also cover defense costs as part of a criminal or regulatory investigation/trial if applicable.

Directors and Officers Insurance FAQs

Understating what policies are best for your corporation on your own can not only be daunting, but can also cost you precious time. To help you get back to your business, we have compiled a list of the most frequently asked questions about corporate insurance below.

Black Q IconWho does directors and officers insurance cover?

Directors and officers insurance covers anyone who is serving on your board of directors and/or in an officer role for your business. Anyone in one of these roles will be covered for claims made against them in relation to their position.

Black Q IconWhat does directors and officers insurance cover?

Because it is a type of liability insurance, directors and officers insurance protects your board and officers against monetary damages associated with lawsuits or allegations.

Black Q IconWhat is excluded from coverage?

Intentionally illegal acts made by your board members or officers are not covered. Examples of acts that are excluded are fraud, personal profiting, pending/prior litigation, and bodily injury/property damages.

Black Q IconWhat are some added values of directors and officers insurance?

With this type of insurance, your company’s leaders and your business, itself, are covered. You should find it easier to retain your leaders, attract investors, and cover any necessary legal fees when you have the right coverage.

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