What Is D&O Insurance Coverage?

D&O insurance, better known as directors and officers insurance, is a type of liability protection that specifically covers a company’s directors and executives. It also protects the company and can cover legal fees, settlements and damages. If the directors or officers are personally placed on a lawsuit, this policy will cover them.

Who Needs D&O Insurance?

This type of insurance isn’t just for large, publicly-traded corporations. Any company that has a board of directors can benefit from having a D&O policy from conglomerates to small non-profit organizations. If you want your business to keep qualified directors for a long period of time, you’ll need this insurance. If you’re in the need for extra capital, venture capitalists and investors will want your company to have D&O insurance as an extra layer of protection. If you need this type of insurance, consult an insurance company to determine what’s best for your situation.

How Does D&O Insurance Protect You?

In this example, your company gets sued for misuse of company funds, fraud, theft of intellectual property or non-compliance with labor or workplace laws. In such suits, you can be sued as an officer alongside the company. Your board of directors can also be sued. If you and your company are found liable, then directors and officers insurance can pay for the damages that are awarded to the plaintiff. If you’re cleared, then it can still pay for all of your legal fees. Bear in mind, however, that any acts or profits that are found to be illegal won’t be covered under a D&O policy.