What Does D&O Insurance Cover?

A large part of risk management is insurance, specifically D&O Insurance. A growing business cannot afford to be hit with a lawsuit, and while you may not be expecting one, it’s best to prepare for the unexpected. 

What Does D&O Insurance Cover?

D&O Insurance covers Directors and Officers, all of their assets, and their spouses in the event of a liability claim made against them or the company.

Directors & Officers are covered for acting within the scope of their role at the company. D&O Insurance does not protect those who deliberately commit criminal or malicious acts. 

If a Director or Officer makes a decision that leads to claims of mismanagement, breach of contract, breach of fiduciary duty, noncompliance with laws or regulations, or other similar accusations, those individuals are the ones in the crosshairs—not the company itself.

When you have a trusted board of Directors and Officers, it’s easy to write off D&O Insurance as an unnecessary purchase. According to a 2020 survey, 83 percent of director and officers (D&O) insurance underwriters expressed concern that companies are not as aware as they should be about the risk and cost of D&O litigation. 

D&O Insurance not only protects your business from mistakes made by Directors and Officers, but also protects against the liability risks surrounding them. The 5 most common sources of D&O liability are employees, government and regulatory authorities, competitors, creditors and shareholders. The more your business grows, the less control you’ll have over every moving part, leaving more room for liability exposures. Proactively protecting your business will give you and your investors peace of mind in times of uncertainty.

Interested in purchasing D&O coverage? HRO Resources has packages for any size business. Schedule a free consultation today.