D&O Insurance: The Basics

What is D&O Insurance?

Directors and Officers insurance, or D&O insurance, is a liability insurance that protects the members of the administrative body of a company and the persons of the company who hold management positions and whose decisions are binding on the company. Let’s take a closer look at everything you need to know about D&O insurance.

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What’s The Purpose of D&O Insurance?

This insurance is intended for managers, directors and officers of companies or associations seeking to guarantee their personal liability and protect their assets against claims by third parties (suppliers, creditors, employees, shareholders, etc.) arising from their decisions and management. In the simplest form, D&O insurance protects against wrongful accusations and acts of the fellow directors and officers of the company.

Public, private and nonprofit corporations with assets of all sizes purchase D&O liability insurance. The policyholder of the insurance must be the company and/or organization.

What Does D&O Insurance Cover?

D&O insurance is mainly used to cover the defense costs of directors and officers (legal costs, costs and fees) incurred in defending a claim which may include recourse costs and incorporation costs and any possible compensation to which they are condemned by the courts for the accomplishment of a wrongful act, either by action or by omission.

What’s not covered? Typical exclusions are for things like, fraud, kickbacks, bodily injury and Insured vs. Insured (meaning your company can’t sue itself to collect insurance).

Why Do You Need D&O Insurance?

• Because it protects your assets and those of the company against unforeseen events in the development of the business.
• Because it offers peace of mind against any claim arising from your position or mandate.
• Because today, the risks associated with running a business do not only affect large companies, but also small and medium-sized companies.

What Types of Incidents Does D&O Insurance Cover?

• Claims from creditors and suppliers for defaults, violation of commercial agreements, etc.
• Lawsuits by your employees for dismissal, breach of contract, discrimination, harassment, etc.
• Prosecution of competitors for unfair competition, industrial espionage, etc.
• Prosecution of partners and shareholders for mismanagement and for not having taken the right decisions in the management of the company.
• Complaints from public bodies and authorities for non-compliance with rules and regulations.

Interested in learning more about D&O insurance and how it can protect your business? Or check out the 5 Common Sources of D&O Liability. There is nothing more important when it comes to protecting your company. Contact the experts at HRO Resources to get started with a quote today.

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