What is directors and officers insurance?
- Directors and officers insurance
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), also called 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 coverage 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.
Learn more about directors and officers insurance coverage.
What does D&O insurance cover?
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
How does directors and officers insurance protect board members?
How much does D&O insurance cost?
Factors that impact the cost of directors and officers insurance include:
- Number of directors on the board
- Number of employees
- Geographic footprint
- Company finances
- Potential for initial public offering
- Risk profile
- Deductible amount
- Past claim history