What Does a Directors and Officers (D&O) Insurance Policy Cover?

BUSINESS INSURANCE


Feb 17, 2021

While you are working through the process of figuring out your insurance solution, you may want to consider Directors and Officers Liability Insurance (D&O). This type of coverage exists to help protect the personal assets of corporate directors and officers in the event that any wrongful acts occur or are alleged to have occurred in managing a business. We're here to help you determine whether or not this insurance is right for your business by explaining what is Directors and Officers Liability Insurance, why Directors and Officers Insurance might be necessary for your business, what kinds of claims it provides coverage for, and by exploring a couple additional reasons why you may want to invest in this type of coverage.

What is Directors and Officers Liability Insurance?

Directors and Officers Insurance protects the personal assets of directors and officers of a corporation in the event they are personally sued by employees, vendors, competitors, investors, or other stakeholders for the actual or alleged wrongful acts in managing the company.

What type of wrongful acts could you be sued for?

  • Breach of Fiduciary Duty

  • Misrepresentation

  • Misappropriation of Funds

  • Fraud

  • Employment Practises

  • Regulatory Compliance

Who Needs Directors and Officers Insurance?

Directors and Officers Insurance has a common misconception of only being for public companies, but that is not the case. Every type of business, public, private, or non-profit, faces potential litigation that a D&O policy would provide coverage for.

Why Do You Need Directors and Officers Insurance?

If you have never purchased D&O insurance before, here are a few reasons you should seriously consider investing in this type of insurance:

  • Bankruptcy: Without D&O insurance, Directors and Officers can be held personally liable to creditors

  • Mergers and Acquisitions: Is an M&A in your future? Buying D&O insurance can protect the Directors and Officers in the event litigation occurs after the deal closes.

  • Venture Capital Requirements: It is common that Venture Capitals will require the purchase of D&O Insurance in order to invest.

  • Attracting New Directors: Having D&O Insurance in place can help attract experienced directors to your board.

  • Employment Practises: This is commonly included in D&O policies and provides coverage in the event of employment practise lawsuits, such as wrongful termination, but it also provides coverage for accusations, in the event of incidents such as the #MeToo Movement of 2017.

Learn more about do you need Directors & Officers Insurance.

Having Directors and Officers Liability Insurance is an amazing way to help strengthen your Business Insurance solution. At Foxquilt, we understand that figuring out what types of insurance you need for your business can feel like a complicated process, especially if you are new to the world of business insurance, and even more so if you are working through this process independently. If you have questions, get stuck, or just want to talk through things, our Foxquilt insurance experts are here to put in the hard work to find a smart insurance solution for your business. Get started on your online quote today.

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