Directors and Officers Liability in San Mateo, CA

The legal cost to defend a company director may be significant regardless of an organization’s size. Further, management liability is generally excluded from commercial general liability policies, meaning it’s wise to consider additional coverage protections. A directors and officers liability (D&O) insurance policy can be essential to a comprehensive risk financing strategy to help protect your officers’ and company’s financial and reputational well-being.

What Is Directors and Officers Liability Insurance?

D&O liability insurance may help protect the personal assets of corporate directors, officers, and their spouses if they are sued for alleged wrongful acts in company management. D&O insurance may also help protect the company as a whole and may help cover legal fees, settlements and other costs. Speak with your insurance agent to discuss how your unique business may be protected with D&O insurance.

What Does Directors and Officers Liability Insurance Cover?

D&O insurance may help cover costs related to directors and officers being sued. Examples of reasons for such lawsuits include the following:

• Fraud
• Lack of corporate governance
• Failure to comply with workplace laws
• Theft of intellectual property
• Poaching competitor clients
• Misuse of company funds
• Misrepresentation of company assets
• Breach of fiduciary duty, leading to financial losses or bankruptcy

Deliberate illegal acts are not usually covered by D&O insurance. Therefore, if a director is found guilty of charges such as intentional misrepresentation or embezzlement, their D&O policy may not cover the lawsuit’s legal fees or other related costs.

What Is General Liability Insurance vs. Directors and Officers Insurance?

A commercial general liability policy typically covers property damage and bodily injury claims. A D&O policy, on the other hand, specifically provides coverage for claims of unlawful actions, such as an actual or alleged error, omission, misleading statement, neglect or breach of duty.

Do We Need Directors and Officers Liability Insurance for Nonprofits?

Any business with an advisory committee or corporate board should consider obtaining D&O insurance, including nonprofit organizations. Because there is no standard policy for D&O insurance, it’s essential to speak with a qualified provider.

Contact Silicon Valley Risk and Insurance Services today to ensure you have the right insurance for your operations.