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Mind Your D's and O's... Directors & Officers Insurance, Do You Need It?

What is D&O Insurance?

Directors and Officers Insurance, also known as D&O liability insurance, protects directors and officers of for-profit or nonprofit companies from damages resulting from their wrongful acts or alleged acts they may have committed in their positions. The policy primarily provides protection in the event of any actual or alleged error, misstatement, omission, or breach of duty. 

We are a small company, do we really need D&O insurance?

Directors and officers liability insurance is needed when a board of directors is assembled. Investors usually require that you have directors and officers liability insurance as part of the conditions for funding your company. Even if there are not private or public investors, D&O insurance could be added protection for the owners of the business against potentially damaging decisions made by the board. 

Claims from clients, employees or stockholders may be made against any company and against the directors and officers of a company. Most directors and officers will want to be covered rather than risk their personal assets since a director or officer can sometimes be held responsible for acts of the company.

What does directors and officers liability insurance cover?

Criminal, administrative, civil, and regulatory proceedings based on actual or alleged acts, errors, omissions, misstatements, neglect, or breach of duty committed or allegedly committed by a director or officer are covered with directors and officers liability insurance.

How much coverage do we need?

Most D&O policies are for coverage of $1,000,000 and carry a deductible of either $5,000 or $10,000 per claim. Depending on your business size and need coverage and deductibles can be placed accordingly.  

We already have E&O Insurance, isn't it the same thing?

Directors and officers liability insurance is often confused with professional liability insurance or errors and omissions (E&O) coverage. The two are not the same; professional liability/errors and omissions coverage applies to performance failures and negligence with respect to products and services, not the performance and duties of the executive team (as with directors and officers liability insurance).

Brown & Brown Insurance can help...

Brown & Brown insures hundreds of businesses big and small. We have helped secure Directors & Officers liability insurance on various types of businesses and have access to the top carriers offering this important coverage. If you have questions about D&O Insurance or would like a quote for your business, please contact us here