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Directors and Officers Need Insurance Protection for Their Actions

Directors and Officers Need Insurance Protection for Their Actions

It’s an awesome responsibility, serving on a board at the helm of a company. These most senior professionals are put in the position of leading the firm, setting the tone for every employee and providing direction on how the organization should conduct business. Ethics, code of conduct, managing organizational conflicts of interest, conducting themselves with the utmost in positive, appropriate behavior in both a personal and professional sense, and generally holding themselves to the highest standards at every turn, knowing that they could be liable legally for missteps—this is what these individuals sign on for when they agree to take on such a role. Understandably, many people would not take on such a role unless they were sure they were offered some protection for their actions. That protection is in the form of a policy, and it can be invaluable. So what is D&O insurance exactly?

Coverage protects companies and officers from lawsuits

This coverage offers protection for the business itself, as well as its directors and officers, in the event of a lawsuit in which mismanagement of their duties is alleged by the claimant. The coverage also includes liability insurance and will pay for court fees for covered claims. This is a policy that can literally save one’s personal and professional life, as these days claimants often sue not only the organization but names individuals to the suit as well, asking for huge damage awards. Without coverage, both the company and the people named in the policy could be on the hook for the full amount of a judgment against them.

The cost of doing business

Consider that many companies today say that the amount they pay for this kind of protection is one of their biggest operating costs, following property rent/mortgage and payroll. It’s important to make sure one is paying the right amount for protection. To accomplish this, contact a professional insurance agent for guidance. Not only can an agent provide details about what is D&O insurance, he or she can assess one’s business operations to select the right mix of coverage options that will provide the most and best protection for one’s business.


photo credit: University of Central Arkansas cc