Directors & Officers Insurance

Directors and Officers (D&O) insurance is a specialized type of liability coverage designed to protect the personal assets of a company’s directors and officers, as well as their spouses, in the event they are personally sued for actual or alleged wrongful acts in managing the company. This insurance can also cover the corporate entity itself. D&O insurance typically covers legal fees, settlements, and other costs associated with wrongful act allegations, which may include breach of fiduciary duty, misrepresentation, or regulatory violations. It’s an essential form of protection for leadership teams across various types of organizations.

D&O insurance is crucial for a wide range of organizations, both large and small. Public companies are often required to have D&O insurance to protect their leaders and attract top talent. However, private companies, non-profit organizations, and even startups can benefit significantly from this coverage. Any organization with a board of directors or advisory committee should consider D&O insurance. This includes corporations, privately held firms, non-profit associations, educational institutions, and religious organizations. Even small businesses can face D&O claims, making this insurance valuable across various sectors and company sizes.

D&O insurance typically covers a range of claims related to management decisions and actions. This can include allegations of breach of fiduciary duty, misrepresentation, regulatory compliance issues, employment practices liability, and shareholder disputes. The policy generally covers legal defense costs, settlements, and judgments arising from covered claims. It can also extend to cover investigations by regulatory bodies. Many policies are structured with three insuring agreements: Side A (covering individual directors and officers when not indemnified by the company), Side B (reimbursing the company when it indemnifies the individuals), and Side C (entity coverage for securities claims). The specific coverage can vary based on the policy and insurer, so it’s important to review the terms carefully.

The cost of Errors and Omissions insurance varies depending on several factors specific to your business. These include your industry, the size of your business, your location, your claims history, the coverage limits you choose, and the level of risk associated with your services. For example, a small accounting firm might pay less for E&O insurance than a large engineering company due to differences in risk exposure. At UCCU Insurance Services, we work with you to understand your specific needs and risk profile to provide a tailored E&O insurance policy at a competitive rate. While premiums can range from a few hundred to several thousand dollars annually, the cost is often a small price to pay compared to the potential financial impact of a lawsuit without coverage.