What is Directors and Officers Liability Insurance?

In the corporate world, there is a plethora of policy combinations, each providing coverage for nearly anything that may take place in the workplace. In the case of Directors and Officers Liability Insurance, coverage protects directors and officers in the case of a personal lawsuit from an employee, vendor, competitor, investor, customer, or other party for actual or alleged wrongful acts in managing a company.

What Does D&O Insurance Cover?

D&O liability insurance is meant to cover directors and officers of businesses ranging between for-profit institutions, privately held companies, nonprofit organizations, and educational institutions. Ultimately, these policies are meant to cover "claims resulting from managerial decisions that have adverse financial consequences." It's often the case that when a dispute arises, the director(s) or officer(s) themselves are held personally responsible, bringing a heavy legal burden onto their shoulders. Directors & Officers Liability Insurance protects against those actions.

Who is Covered?

As mentioned, this policy covers directors and officers while also generally covering the company. All associated legal fees, settlements, and costs are generally covered under the policy. Once a resolution is reached, D&O insurance provides coverage that ensures those involved are held harmless for losses due to their place in the company.

Do You Need Directors and Officers Insurance?

While public companies are naturally at a larger risk for lawsuits, companies of all types are at risk for D&O litigation risks. Public, private, and non-profit organizations benefit from the additional peace of mind that coverage provides, ensuring that the company and its leaders are covered in any situation.

Regardless of the size of your company, there is always a risk of legal action. Being prepared and having the correct kind of coverage in your policy helps to provide assurance that your people and your company is covered when legal disputes arise. For those interested in getting started, the Lowry Insurance team is home to insurance professionals with deep experience in commercial coverage.