One of the main types of insurance that gets overlooked is Directors and Officers (D & O) Insurance. And if you’re a director or an officer of a business, this is certainly a coverage you should be looking into. Why? Because it is a liability coverage specifically for directors and officers in case they are sued while they are in that position. General liability coverage doesn’t always insure for errors made by the directors and officers so without having D & O coverage specifically, they could be liable for damages if a claim is made due to one of their decisions for the business.

For instance, if the choice of the directors or officers causes one or several of the company’s clients’ financial losses, the lawsuit could go back to that choice the directors and officers made. Additionally, if the directors and officers mismanage the company and fail to obey certain protocols, they could also be held liable.

Therefore, any director or officer of a company that is for-profit or non-profit should have this coverage with the company so they don’t personally become responsible if a legal action is taken against them.  Also, D & O coverage can help cover legal fees due to the lawsuit so the business doesn’t have to cover those charges.

Another thing to consider are the various different clauses that are insured with D & O coverage, which are considered “sides.” Generally speaking, Side A covers individual directors and officers when the business does not protect them specifically, Side B covers the business when it does protect its directors and officers, Side C covers publicly traded businesses and large private corporations for security claims against both the directors and officers and the business.  Which “side” of coverage is best for the business needs to be discussed with the insurance broker.

There are many different facets of D & O policies that need to be discussed to get the right plan for a business, as there are certain items this type of insurance does not cover (i.e. criminal activity).  Also, there are various specifics to consider when getting this type of coverage depending on how the business is set up and how it wants to cover their directors and officers.  To find out how a D & O insurance policy can benefit you and your company, contact Robert Rice at Sargeant Insurance Agency, LLC (robert@sargeantinsurance.com or 818-561-2600).