Director & Officer

Directors and Officers Insurance (D&O) is to provide the directors and officers of a corporation or board with the financial protection against claims arising out of the board's or corporations activities. These individuals whether working for a wage or as a volunteer are held liable for actions of a fiduciary nature. This could be a breach of duty, a misstatement, error or omission in your capacity as a director of officer of the corporation or board. If the claim is due to a wrongful act or negligence then it has to be perceived as deliberate. The Commercial General Liability (CGL) policy will exclude any claims of this nature.

If you do not have a D&O policy then you personally will have to retain your legal counsel to represent you in court and could be held personally liable for any award made in the courtroom. This could cost you everything you have worked for and all your assets. Not a good thing to have happen.

When choosing your D&O policy there are different insuring clauses available. One will reimburse you for the defense costs that you have paid. This means you will dip into your cash reserves or savings when retaining your legal counsel. The other form is when your legal costs are paid directly by the insurance company. Be sure you know which type you have purchased.

It is very important that you review the coverage you have with your agent or broker.