Businesses want to safeguard those at the top, like CEOs and governing boards. Many entities invest in directors & officers (D&O) insurance to protect these parties. It is a personalized level of protection for those who make the decisions. However, even a D&O policy is not a catch-all type of coverage. When will it not help your business?
D&O coverage will have exclusions, notably for bodily injuries or property damage. Even so, you might have help through other coverage in your insurance portfolio. Work with a commercial insurance agent to determine the right course of action.
Understanding D&O Insurance
A D&O policy is liability coverage. It applies to managerial decisions that cause harm to others. Company principals make these decisions. So, they stand to take the most blame should an accident occur. Should the affected party sue the business, they could target an officer individually.
With coverage, a director will have protection should a liability suit call their personal assets into question. Coverage can usually protect the financial and personal security of the director. It might also even protect their family. Therefore, it is a more-targeted type of coverage for those who stand to lose a lot in case of mistakes. It is so important that many principals demand a company carry coverage before they will consider a job offer from the business.
D&O policies usually cover harm from mistakes like breach of fiduciary duty, misrepresentation of assets, fraud and similar occurrences. Should these cause financial losses, the policy can help affected parties recover costs. The coverage might also help principals and businesses cover legal fees.
However, the D&O policy will still have exclusions. Notably, it will likely not pay any costs for injuries or property damage customers sustain in the business. You might need coverage to help you in these cases.
Additions to D&O Coverage
A customer might slip and fall in your store. They might sue the business and its principals for their losses. However, this is a physical injury. Most D&O insurance policies will not cover costs related to these claims. Coverage generally only applies to monetary losses.
Instead, you might need coverage through a commercial general liability (CGL) policy. Most CGL coverage will apply to injuries and property damage the business, including principals, causes to others. Therefore, you’ll likely need this coverage alongside your existing D&O policy. The policies can work in tandem to cover the accidents they explicitly insure.
Also Read: Get D&O Insurance to Improve Your Reliability