Directors & Officers Insurance protects company owners, managers, officers, and directors’ personal assets that are at stake when making decisions affecting the company or non-profit organization.
A suit can be brought against the Directors & Officers by a third party or the company itself. Private company examples range from suits brought by investors claiming mismanagement of company assets to an outside party bringing legal action for hiring away employees or alleged unfair trade practices.
Non-profits purchase D&O to protect their board members who diligently, and often voluntarily, serve the cause of the organization. Fundraising, community awareness, and reputation are important to a non-profit and they often select influential board members. More often than not, these board members have significant wealth and the D&O policy allows them to make decisions freely without the fear of personal liability.
Why do companies and organizations purchase D&O Insurance?
- Managers make mistakes.
- Protect those who help guide your business and your decisions.
- Allows management to make decisions more freely.
- Protects the business from a variety of alleged wrong doing by wish to protect their personal assets.
- Allow companies and non-profits attract talented board members who wish to protect their personal assets.
Who buys Directors & Officers Insurance?
- Non-profits that want to protect their board members and show goodwill.
- Companies that want to protect their investors.
- Small & medium sized companies that want to protect their individual assets if management decisions bring poor results.
Who can make a claim against the D&O policy?
- Competitors
- Creditors
- Regulators
- Employees
- Suppliers
- The company itself
