Directors and officers (D&O) insurance
Directors and officers insurance protects those who serve as directors or officers within a business or institution.
Did you know that a standard business insurance policy doesn’t automatically protect individuals who run a company or nonprofit? In fact, officers and volunteer members on the board of directors could still be held personally liable in the case of a lawsuit against the business.
So, how do you protect your company’s leadership team?
Enter directors and officers liability insurance—the only way to shield individuals who serve on committees and boards from liability and personal financial loss.
Directors and officers insurance, also referred to as D&O, is all about protecting the “higher-ups” of a company. It covers anyone who serves as a director or as an officer against:
Because these types of allegations are common in the business community, many companies are deciding to purchase D&O insurance as a way to retain and attract accomplished board members and executives.
D&O insurance is one of the primary ways you can safeguard both your organization and its key members from a liability claim. Many experts suggest that it’s an ideal complement to general liability insurance since a general liability policy can cover claims related to third-party bodily injury or property damage, whereas D&O applies to wrongful claims acts.
And what are wrongful claims acts?
Wrongful claim acts are (usually) situations where the economic or monetary loss occurred that was unrelated to property damage or an injury. Common examples include wrongful termination claims, discrimination suits, or contractual disputes. A D&O policy has several parts, which are referred to as sides A, B, and C:
As with most types of policies, directors and operators insurance policies vary depending on your company, its risk profile, and the insurer. Oftentimes, that policy can be tailored to suit the business’s specific liabilities. However, generally speaking, many D&O policies exclude the following:
Being a leader of a company is a responsibility that comes with inherent risks. There are all sorts of specific claims that can be made against an individual within the leadership team in our society today, including:
These are just a few of the liability exposures members of a corporate leadership team could face. And, because the risk landscape is continuously evolving and changing, the need for D&O insurance is greater now than ever before. In addition to this, there are three factors that are driving the demand for D&O:
In addition to paying for claims made, directors and operators insurance offers several value-adds to any business, notably:
So you’ve learned about D&O insurance, but as we’ve mentioned, D&O insurance doesn’t cover a business from third-party property damage or injury claims. Nor does this insurance coverage protect you when someone claims your negligence resulted in their financial loss. You need to consider a few extra steps beyond D&O.
To fortify your business’ liability armor, you need general liability insurance and professional liability insurance. This is where Thimble—the next big thing in small business insurance—comes in.
Thimble provides on-demand general liability and professional liability policies that offer small businesses insurance with game-changing flexibility. It works when you do; pay by the hour, day, week, or month. Getting insurance has never been so simple.
Just download the Thimble app or click “Get a quote.” In under a minute, you’ll go from zero defense against liability to having a Certificate of Insurance on hand.
With Thimble, you’ll be protected from whatever life throws your way (no matter how hard they throw it).
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.