Understanding the Importance of Directors and Officers Liability to Business Insurance

If you own or operate a business, you may want to learn more about the importance of directors & officers liability coverage. This type of insurance, sometimes also referred to as D&O liability, can help protect both executives and the company in several frequent claim situations. Here’s what you need to know about how this coverage could benefit your company.

D&O Coverage Can Protect Both Individuals and Companies

There are several different types of D&O coverage, each of which can offer both corporate-level and individual-level protections. The main types to be aware of are:

  • Side A coverage, which offers protection for the personal assets of individual officers and directors;
  • Side B coverage, which can reimburse a company for claims involving its directors and/or officers;
  • Side C coverage, which offers the company protections when a director or officer is a liability claim defendant.

Mitigating D&O Liability With Insurance Helps Lower Several Business Risks

With this specialized insurance, you can lower common business risks associated with directors’ and officers’ liability. Having D&O insurance:

  • Provides a safety net for corporate decisions
  • Gives potential director and officer candidates confidence in company management
  • Helps reduce the financial and legal risks associated with many D&O claims

No matter your type of business, having thorough directors & officers liability insurance in place can prove indispensable in certain claim situations. Review these critical points to make sure you thoroughly understand the purpose and the benefits of D&O insurance coverage.