Leaders of both for- and non-profit organizations assume a certain level of risk when they take their leadership positions. Because they have an oversized influence on their organization, they’re sometimes held personally liable for incidents that negatively affect the group they lead. Directors and officers insurance can help shield leaders of Massachusetts organizations from certain lawsuits that they might face if something goes awry.
Directors and officers insurance is a specialized form of professional liability insurance. As a liability protection, policies usually help pay legal fees, settlements and judgements that are associated with covered lawsuits and claims.
Many leaders in Massachusetts may benefit from having a D&O policy in place. As mentioned, this insurance may be appropriate for leaders of both for-profit and nonprofit groups. Some people who might want coverage in place include:
Presidents and vice presidents
Chairpersons and board members
Directors and/or officers
In short, anyone whose decisions and actions have an especially significant impact on their organization.
While leaders are generally welcome to purchase their own D&O policies, it’s fairly common for businesses and nonprofits to secure coverage for their senior officials. This is because the need for coverage is typically directly tied to leaders’ work with their respective organization.
D&O policies are normally affordable for organizations, but their premiums do frequently vary. Insurers often base premiums on how many leaders a policy covers, what positions those leaders hold, whether the organization has a history of filing insurance claims and how much protection is selected.
For a detailed explanation of how much a policy would cost them, organizations should contact an independent insurance agent who specializes in this type of professional liability coverage. A specialized agent will know what coverage options are available and what factors affect premiums, and one who’s independent will be able to compare quotes from several different insurance companies in the state.
There isn’t one set amount of D&O coverage that’s right for every situation, and organizations ought to take several items under consideration when determining how well to protect their leaders. This is usually a process that involves several key people:
The leader(s) who are being insured
The decision maker(s) who will ultimately decide on a coverage option
An attorney who can give example scenarios for consideration
An informed insurance agent who can explain coverage options and compare policies
Because this is a unique and detailed insurance, it’s often wise to work with an insurance agent who specializes in the coverage.
Depending on their terms and conditions, D&O policies may protect against a range of potential incidents. Some examples of claims that a policy might cover include issues related to leaders’:
Bad investment decisions
Conflicts of interest
Acts of gross negligence
Improper disclosures of protected information
Having coverage isn’t an excuse for committing these acts, and it frequently doesn’t protect leaders from criminal charges or other consequences that follow their actions. Coverage is normally limited to certain civil suits and claims.
For help finding directors and officers insurance for your business or nonprofit, contact the insurance professionals at Paul T. Murphy Insurance. Our independent insurance agents have helped many organizations in Massachusetts find this coverage, and our team is ready to assist you.