What Incidents Does D&O Insurance Cover?
As is true with most other types of insurance, the exact incidents that any one D&O insurance policy might cover are determined by that policy’s terms, conditions, exclusions and limits. Depending on a policy’s terms and conditions, it may cover some or all of the following incidents:
- Conflicts of interest
- Poor investment decisions
- Issues arising from personnel decisions
- Improper releases of personal or confidential data
- Unlawful acts
- Gross negligence
- Other mistakes leaders might make
Coverage for conflicts of interest, acts of gross negligence and unlawful acts doesn’t grant leaders permission to commit these misdeeds. Coverage may, however, provide financial protection against lawsuits related to how these acts impact an organization.
Who Purchases D&O Insurance?
Although the coverages included in a D&O insurance policy normally protect leaders, these policies are usually paid for by the organizations that policyholders lead. Organizations typically pay the premiums because the risks that policies protect against directly arise from leaders’ activity with and responsibility to the organizations they lead. If leaders never came on board with an organization, they probably wouldn’t need the protection.
How Much Directors and Officers Coverage Should Leaders Be Offered?
Organizations that want to offer their leaders directors and officers coverage should take into account a few different factors when deciding how much coverage to purchase for leaders. Some of the items that organizations may want to consider are:
- The amount of risk that a leader is exposed to
- The potential cost of a covered claim
- Any other resources available to help leaders (e.g. lawyers who are on retainer)
- Any policies other organizations offer to leaders as part of their compensation package
- Any other factors that may impact a claim
Ultimately, organizations might want to talk with an experienced insurance agent and an attorney when selecting a policy. An attorney can help assess the amount of risk that leaders are exposed to and potential cost of a claim. An insurance agent who specializes in this coverage can explain what protections are available and what limits a policy comes with.
How Can Leaders and Organizations in Massachusetts Get Directors and Officers Insurance?
For help finding directors and officers insurance, contact the experienced and independent insurance agents at Scotti Insurance Agency. Our team has helped many leaders in Massachusetts get the coverage they need, and we have the expertise required to help you get the right amount of coverage. Since we’re an independent agency, we can help you find the best available policy no matter what insurance company is offering it.