D&O insurance

D&O Insurance

Directors and officers insurance protects your leadership team from personal financial liability when they're sued for decisions made on behalf of your company. Board members, executives, and managers can face personal lawsuits from shareholders, employees, customers, or competitors claiming that leadership decisions caused financial harm or violated duties, and D&O insurance covers defense costs and potential settlements or judgments without requiring leaders to pay from personal assets.

Even when leaders act in good faith and make reasonable decisions, they can still face lawsuits alleging mismanagement, breach of fiduciary duty, or regulatory violations. Legal defense costs alone can exceed $100,000 before reaching trial, and without D&O coverage, board members and executives might have to pay these costs personally. This exposure makes it difficult to recruit qualified leaders who understandably don't want to risk their personal wealth by serving on your board or in executive roles.

Coverage typically includes defense costs, settlements, and judgments for claims against individual leaders, as well as reimbursement to your company when it indemnifies leaders for covered claims. Side A coverage protects individuals directly when the company cannot or will not indemnify them, which is crucial in bankruptcy situations or when indemnification would violate law. Side B reimburses your company for indemnification payments, while Side C covers the company itself for securities claims.

Nonprofit boards face similar risks as for-profit companies but often operate with limited resources and volunteers who definitely won't serve if they face personal liability. Employment practices claims, regulatory investigations, and shareholder derivative suits can all trigger D&O coverage. We'll help you understand the specific risks your leadership team faces, determine appropriate coverage limits based on your company size and industry, and find policies that protect both individual leaders and your organization from the financial impact of leadership liability claims that have become increasingly common across all business sectors.