What is directors and officers liability insurance?
Directors and officers (D&O) liability insurance, also known as management liability insurance, protects corporate leaders from financial loss due to allegations and lawsuits during their tenure.
Directors and officers liability insurance covers damages involving wrongful acts committed in the discharge of your duties, including: negligence, misconduct, errors and omissions, breach of duty, misleading statements or any other act that could be held against you in your capacity as a director or officer. In the event of a lawsuit, this protection would cover legal fees to defend yourself.
D&O liability insurance also provides entity coverage, or reimbursement, in cases wherein both the corporate leadership and the organization are named in a lawsuit.
Does my company need directors and officers liability insurance?
Directors and officers liability insurance benefits companies of all sizes and industries. Whether a corporation is publicly or privately held or a not-for-profit, it’s necessary to secure your corporate leadership from exposure to liability claims that impact top talent, company finances, and even long-term survival in the face of negative PR and the risk of losing investor confidence.
Common liability claims faced by directors and officers in which D&O liability insurance provides coverage:
- Inferior corporate leadership, according to professional or industry standards
- Breach of fiduciary duty, such as professional disloyalty or profiting off a conflict of interest
- Legal or regulatory compliance failure
- Passing executive decisions without proper authority
- Wrongful employment and professional practices
- Failure to adhere to bylaws
- Contract disputes
- Slander or defamation
- Copyright infringement
- Discrimination
- Mismanagement of funds
Directors and officers of your board can be sued by:
- Government agencies
- Financial institutions
- Business partners
- Competitors
- Employees
- Suppliers
- The general public
What does directors and officers liability insurance cover?
D&O liability insurance provides protection for corporate leaders — the very people who engineer every venture’s success.
- Directors and officers liability: covers directors and officers and/or the company if sued or taken to court for legal or regulatory compliance failure.
- Defence costs reimbursed: covers losses or reimbursements for legal fees or any other costs incurred in defending directors and officers against lawsuits.
- Employment practices liability: including wrongful dismissal or discretionary hiring practices lawsuits.
Additional coverage options may include:
- Coverage for breach of contract
- Outside directorships
- Non-compensatory and punitive damages
- Subsidiaries
- Corporate bylaws and indemnification provisions
How much does directors and officers liability insurance cost?
Multiple factors are considered to find the best directors and officers liability insurance policy for your business. The following can impact your coverage rates:
- Number of officers and directors
- Hiring, employment, and HR practices
- Number of voting and non-voting shares
- Company structure (for-profit/non-profit)
At BrokerLink, we understand that every business has unique needs, and our knowledgeable brokers can find the coverage that fits your business.
Understand your risks
Directors and officers have an obligation to perform their duties with care and prudence. If lawsuits are filed due to a failure to provide appropriate practices and procedures, there may be steps you can take to mitigate your risks proactively, such as:
- Seeking legal advice for proper termination of employees.
- Ensuring financials are accurate and up-to-date.
- Securing and back-up the personal information of employees and clients on a secondary secured source.
- Creating a company harassment policy and regularly training new and existing employees on the policy.
Ask Our Brokers
Our brokers know the value of maintaining effective corporate leadership and ensuring the future growth of the business.
We work with leading insurance providers to equip your company with comprehensive directors and officers liability insurance. We share your goal in helping to protect the visionaries of your company through competitive rates and tailored plans.
- Tell us about your business and corporate leadership: Multiple factors are considered to find the best directors and officers liability insurance policy for your business.
- Discover leading options: our insurance brokers present you with various options for directors and officers liability insurance, all from leading providers. You can trust our brokers to source and recommend the most comprehensive policies at the most competitive, cost-effective rates for your business.
- Build the future of business: take your company to greater heights and enjoy better business with comprehensive insurance coverage that secures your corporate leaders’ creative vision.
Contact BrokerLink for a directors and officers liability quote today!
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