Directors and officers insurance protects board members and officers against legal expenses if they are sued for a decision they made on behalf of the company that led to a financial loss.
When does a small business need directors and officers insurance?
Any company or nonprofit organization that has a board of directors should consider directors and officers insurance (D&O), a type of management liability insurance. D&O protects board members from lawsuits over decisions they make while serving on your board. If they're sued, they could have to pay thousands of dollars in legal costs.
Securing this insurance policy protects your board members and the officers they elect or appoint. It helps your small business attract and retain top talent since they know they'll be protected. Most board members will expect your business to carry this policy.
D&O insurance protects board members from lawsuits related to:
Mismanaged funds
Employee grievances
Slander, libel, and copyright infringement claims
Failure to follow organizational bylaws
Failure to comply with regulations
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How does directors and officers insurance protect board members?
Your board members and officers face many of the same risks as your business: lawsuits over hiring and firing decisions, trademark issues, and mismanagement of funds. Unlike your business, they are not protected by general liability or professional liability policies. If they're sued, D&O insurance can help pay the cost of hiring an attorney, judgments, settlements, and other expenses related to the lawsuit.
Small businesses often bundle D&O with EPLI for a discount
Small business owners often choose to bundle D&O insurance with employment practices liability insurance (EPLI), another type of management liability insurance. EPLI can cover your legal costs if an employee sues your business over unfair hiring practices or another violation of employee rights. A management liability insurance bundle usually costs less than purchasing the policies separately.
How much does D&O insurance cost?
Factors that impact the cost of directors and officers insurance include:
"The response time was almost immediate. The options I was given were based on my company's needs. I received the policy in record time."
Esther L.
Management consultant
"Raynaldo made quick work of things. I told him what I needed, and ultimately I had a certificate of insurance in a matter of hours."
Michael D.
Programmer
"I had an urgent contractual requirement for insurance in December to pay before the end of the year. Holly Burton worked with The Hartford to send me an invoice around Christmas. I have saved hundreds in taxes."
Richard C.
Software / internet design
"Great streamlined process. Quick, easy, and support is very helpful."
Ryan F.
System integration
"Denise Smith is a breath of fresh air. I loved every second dealing with her. And, yes, I'm talking about buying insurance. Most people don't love that, but Denise made the experience exceptional. She is a rock star!"
Kristine W.
Food products manufacturing
"We needed quotes fast and coverage even faster. We received both. We appreciate your service. THANK YOU."
Rich H.
Engineer
"The response time was almost immediate. The options I was given were based on my company's needs. I received the policy in record time."
Esther L.
Management consultant
"Raynaldo made quick work of things. I told him what I needed, and ultimately I had a certificate of insurance in a matter of hours."
Michael D.
Programmer
"I had an urgent contractual requirement for insurance in December to pay before the end of the year. Holly Burton worked with The Hartford to send me an invoice around Christmas. I have saved hundreds in taxes."
Richard C.
Software / internet design
"Great streamlined process. Quick, easy, and support is very helpful."
Ryan F.
System integration
"Denise Smith is a breath of fresh air. I loved every second dealing with her. And, yes, I'm talking about buying insurance. Most people don't love that, but Denise made the experience exceptional. She is a rock star!"
Kristine W.
Food products manufacturing
"We needed quotes fast and coverage even faster. We received both. We appreciate your service. THANK YOU."
Rich H.
Engineer
"The response time was almost immediate. The options I was given were based on my company's needs. I received the policy in record time."
Esther L.
Management consultant
"Raynaldo made quick work of things. I told him what I needed, and ultimately I had a certificate of insurance in a matter of hours."
Michael D.
Programmer
"I had an urgent contractual requirement for insurance in December to pay before the end of the year. Holly Burton worked with The Hartford to send me an invoice around Christmas. I have saved hundreds in taxes."
Richard C.
Software / internet design
"Great streamlined process. Quick, easy, and support is very helpful."
Ryan F.
System integration
Updated: June 29, 2022
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