Directors and Officers Liability
Should we purchase directors and officers liability for our privately held company? That’s an excellent question, and it’s a question asked by many directors and officers of privately held companies like yours. It’s important for you to understand the many risks you face as directors and officers of a privately held company, and how these risks can be handled by liability insurance. You already recognize the importance of purchasing general liability, automobile liability and employers’ liability insurance policies, but these policies are generally limited to claims based on bodily injury and property damage for which your company is legally liable- you should consider a comprehensive directors and officers liability policy, as well.
Directors and officers liability insurance policies are designed to cover other types of claims that might be brought against you individually or the company for the decisions you make on behalf of the company. Such claims can be made when actions, inactions or decisions of the company’s directors or officers cause financial harm to others, including stockholders, employees, competitors, customers, suppliers, or creditors. In addition, a variety of claims can be made by government agencies against the directors and officers of privately held corporations, including those involving environmental contamination and employee health and safety.
Without proper directors and officers liability insurance to cover claims such as these, your personal assets may be the only available source to cover the potential costs of defending the allegations and funding any adverse settlements or judgments.
D&O liability insurance is widely available from a number of insurance companies and is surprisingly affordable. Ask your agent for a proposal and premium quote.