While you designed your management team like a “well-oiled machine” to keep your operations rolling without a glitch, it’s sometimes easy to forget that these “machines” are in fact humans, and, sooner or later, they can make mistakes. Luckily, Directors and Officers Insurance can help. 

What can D&O cover?

Unlike Commercial General Liability Insurance which protects your business for third party bodily injuries or property damage caused by your product, accidents on your premises or your operation, Directors and Officers Liability Insurance (or D&O insurance) is designed to cover damages from actual or alleged wrongful or negligent acts on your management’s or board members’ behalf. See the infographic below for a few examples.

More reasons to consider D&O

While your business may be financially stable, it may not have enough funds at its disposal to sustain a possible lawsuit and the resulting aftermath. Moreover, Directors and Officers personal insurance policies never include legal defence costs and penalties. 

The good news is that a Directors and Officers Liability policy can be purchased by your business and also includes the following extensions: 

• Legal defence costs and indemnities payable by the entity named in the policy.
• Protection for past, present and future directors. 

How does a D&O Insurance policy work?

1. A director or officer allegedly fails to fulfill his or her management responsibilities.
2. This leads to some people from within or outside the organization to sue the director or officer
3. Director is served with a lawsuit.
4. Director advises organization’s legal representative.
5. Organization reports the claim to their insurance broker and provides all the details and documents.
6. If the claim is covered, the insurance company pays for the defence costs and indemnity to the plaintif if lawsuit is lost.

What is not covered by a D&O Insurance policy?

• Criminal or fraudulent conduct
• Personal gain
• Intentional non-compliant acts
• Fines and penalties
• Claims reported on a previous D&O policy
• Claims covered by other insurance policies

Include D&O Insurance in your “war chest” 

Whether an SME or a large public company, your organization can be sued as a result of your management’s or board of directors’ missteps. These damages can suffocate your business if insufficiently insured.

Don’t fight alone! Contact an LMBF expert for a 15-minute conversation about our tailor-made Directors and Officers Liability Insurance solutions – it’s 100% informative and non-binding. 

Accidental wrongdoing, Attempt on reputation, Breach of agreement, Breach of duty, Conspiracy to commit fraud, Creditor claim, Defamation, Deceptive practices, Duty of care, Duty of loyalty, Error in management, Failure to comply, Failure to disclose, False claims, False declaration, Fraud, Governance oversight, Harassment, Inaction, Inadequate reporting, Illegal activity, Illicit activity, Lack of oversight, Malpractice, Misappropriation of IP, Misconduct, Misrepresentation, Misgovernance, Negligent acts, Non-compliance, Non-delivery, Non-disclosure, Omission of disclosure, Omission of fiduciary duty, Regulatory failure, Reputational damage, Suspicion of collusion, Suspicion of negligence, Unauthorized use, Unethical behavior, Unethical competition, Unfair practice, Violation of privacy, Willful wrongdoing, Wrongful disclosure, Wrongful dismissal and more.