Directors & Officers Insurance – Why?

Your organization’s assets and the personal assets of its directors and officers are at risk with every decision you make, every day.

Directors and officers (D&O) liability insurance protects the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued by employees, vendors, competitors, investors, customers, or other parties, for actual or alleged wrongful acts in managing a company.

Directors and Officers claims have become increasingly common. Directors and officers themselves can be held personally liable for these claims. To attract and retain qualified executives and board members, it’s crucial to have a comprehensive insurance program in place. Seventy percent or more of all directors and officers have inquired about the amount and scope of their organizations’ D&O coverage.

Directors & Officers Insurance

Directors and officers are sued for a variety of reasons related to their company roles, including:

  • Breach of fiduciary duty resulting in financial losses or bankruptcy
  • Misrepresentation of company assets
  • Misuse of company funds
  • Fraud
  • Failure to comply with workplace laws
  • Theft of intellectual property and poaching of competitor’s customers
  • Lack of corporate governance
Illegal acts or illegal profits are generally not covered under D&O insurance.
It’s a common misconception that D&O claims are mostly a public company phenomenon. In fact, a recent Towers Watson survey showed that public, private, and non-profit companies all face D&O litigation risks.
Any business with a corporate board or advisory committee should consider investing in D&O insurance, including non-profit organizations. Your company does not have to post revenues in the tens of millions of dollars for your directors and officers to be personally sued over their management of company affairs. In fact, smaller businesses with fewer assets may need the protection just as much as large, deep-pocketed corporations.
Consult an insurance professional at Professional Underwriters who specializes in D&O coverage to determine where your liability coverage gaps are.