Myths About Directors & Officers Liability
Posted on: October 1, 2015 by Care Providers Insurance
Lawsuits against Directors and Officers on nonprofit boards are increasing at an alarming rate. Still, many find themselves under insured and completely unaware of the fact that directors’ and officers’ personal assets are at risk without D&O insurance. In today’s society, nonprofits and their boards commonly face allegations of wrongdoing that wrack up some large bills. According to Wyatt Nonprofit Organizational Directors’ and Officers Liability Survey, the average cost to defend a lawsuit is between $35,000 and $100,000. D&O liability insurance will cover a nonprofit and its directors, officers, and trustees against allegations of wrongdoing that occur from their roles governing the organization.
Myth: My regular liability insurance policy covers it
Truth: It’s unlikely that your liability insurance policy includes personal liability coverage for directors and officers. A general liability policy only covers an organizations basic exposures, and a D&O policy is designed to fill the coverage gaps that a general liability policy provides. An opt out of D&O coverage exposes board members to substantial personal liability. It may be the only thing protecting your clients from the loss of personal assets in the event of a lawsuit.
Myth: Privately held businesses’ don’t need D&O policies.
Fact: Privately held companies are just as susceptible to D&) claims as publicly held companies. D&O claims result from the actions of a companies directors and offers related to their role. To this end, a D&O claim can result from customers, volunteers, competition, creditors, and more. In addition, private companies without specialized support satff or advisors for complex legal requirements and
Myth: All D&O Policies are the same
Fact: There are no standard D&O insurance forms. Language, terms, provisions and exclusions may all differ within policies. Each quoted policy needs to be thoroughly read and compared in order to pick the best one for the organization.
Myth: Insurers don’t pay claims
Fact: The right insurance company will pay your claims without hassle. A common issue is that insureds don’t review their coverages and provisions until after a claim is made. Insureds must work closely with their insurance companies from the beginning to maximize their chances of insurance recovery.
Care Providers Insurance Company is dedicated to protecting clients from risks like directors and officers liability. For more than 25 years, we’ve been offering a comprehensive, affordable insurance program. For more information about our products and services, please contact us today at (855) 790-7379.