Why Directors and Officers Insurance in New York City
Similar to individuals serving on the board of private companies, directors and officers working in a non-profit environment should consider the organization’s risk and implement risk management strategies to minimize litigation exposures. Part of this process includes finding the right Directors and Officers (D&O) insurance policy to fit the needs of your organization. Gross & Company Insurance serves the diverse companies and organizations of New York City with policies that are focused on our clients’ needs rather than the bottom line.
Historical Need for D&O Insurance
The earliest marketing of D&O insurance took place in the 1930s, though the volume of policies sold remained relatively low until the 1960s when “merger mania” took place, leading to costly legislation for a number of companies and organizations. In the 1980s, the nation faced a “D&O crisis” in which policies came with high premiums, reduced availability, and extensive exclusionary clauses. Since this time, insurers have worked to make policies more accessible, affordable, and effective for private companies and non-profit organizations.
The need for D&O policies is prevalent in community associations, private companies, and non-profits, but non-profit organizations actually make claims about twice as often as private companies. In the past 10 years, 63% of non-profit organizations in the United States reported D&O claims, and 85% of these claims were employment related. With coverage through Gross & Company Insurance, you can rest assured knowing that your non-profit has the protection it needs in these frequent claims.
Purchasing D&O Policies
- Company Purchased Policies – Most D&O policies are purchased by non-profit organizations or other companies rather than the members of the executive board themselves. With these policies in place, an organization may have a stronger appeal for directors seeking positions.
- Criminal Acts Exclusion – It is important to note that intentional illegal acts and illegal profits are not covered under D&O insurance policies. The coverage is always limited to wrongful acts defined under policy, not by law.
- Insuring Clauses – D&O Policies typically have multiple clauses to provide coverage in many different situations. Side A coverage would pertain to individual directors and officers when not indemnified by a corporation. Side B covers the corporation when individuals are indemnified, and side C protects the organization itself when securities claims are brought against it.
To contact Gross & Company Insurance for a discussion of your organizations D&O insurance needs, call us at (212) 620-0922. We have been in the business of non-profit insurance since 1925, and we remain fully dedicated to designing competitively priced, straightforward policies to all of our clients in New York City.