[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/blinsuranceadvisors.com\/2019\/06\/24\/directors-and-officers-insurance-for-corporations-and-non-profits\/#BlogPosting","mainEntityOfPage":"https:\/\/blinsuranceadvisors.com\/2019\/06\/24\/directors-and-officers-insurance-for-corporations-and-non-profits\/","headline":"Directors and Officers Insurance for Corporations and Non-Profits","name":"Directors and Officers Insurance for Corporations and Non-Profits","description":"Avoiding corporate scandals has forced privately held companies and non-profit corporations to reassess their insurance policies to limit their liabilities arising from management decisions of their board of directors. This is where a good directors and officers insurance policy becomes invaluable.   Statistics show that employees and shareholders are the likeliest groups to lodge D&O...","datePublished":"2019-06-24","dateModified":"2025-08-12","author":{"@type":"Person","@id":"https:\/\/blinsuranceadvisors.com\/author\/frank\/#Person","name":"frank","url":"https:\/\/blinsuranceadvisors.com\/author\/frank\/","identifier":5,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/4a1c6ed17d956c0758172d8e1533e7d7ab94d2720587946b1e7dd5714bebdec3?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/4a1c6ed17d956c0758172d8e1533e7d7ab94d2720587946b1e7dd5714bebdec3?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Blue Lion Insurance Advisors","logo":{"@type":"ImageObject","@id":"https:\/\/blinsuranceadvisors.com\/wp-content\/uploads\/2020\/04\/blue-lion-logo.png","url":"https:\/\/blinsuranceadvisors.com\/wp-content\/uploads\/2020\/04\/blue-lion-logo.png","width":600,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/blinsuranceadvisors.com\/wp-content\/uploads\/2020\/04\/blue-lion-insurance-advisors-directors-and-officers-insurance-scaled.jpg","url":"https:\/\/blinsuranceadvisors.com\/wp-content\/uploads\/2020\/04\/blue-lion-insurance-advisors-directors-and-officers-insurance-scaled.jpg","height":1707,"width":2560},"url":"https:\/\/blinsuranceadvisors.com\/2019\/06\/24\/directors-and-officers-insurance-for-corporations-and-non-profits\/","about":["Business Insurance","Directors and Officers Insurance"],"wordCount":743,"articleBody":"Avoiding corporate scandals has forced privately held companies and non-profit corporations to reassess their insurance policies to limit their liabilities arising from management decisions of their board of directors. This is where a good directors and officers insurance policy becomes invaluable. Statistics show that employees and shareholders are the likeliest groups to lodge D&O lawsuits against private companies. If you\u2019ve been assessing your D&O risk, then continue reading to learn more about D&O insurance and how it can help protect your business. As an officer or director at your organization, you may encounter a plethora of employment-related exposures. Sarbanes-Oxley regulatory mandates increased shareholder activism, which means that directors are at risk for claims and increased settlement costs. The legal cost to defend a director is substantial, as are the potential personal penalties that can be incurred. Due to personal risk\u2014not covered under a personal insurance policy\u2014protecting boardroom talent can be challenging. A directors\u2019 and officers\u2019 liability insurance (D&O) policy is part of a comprehensive risk financing strategy. D&O Fills the Coverage GapUnlike a commercial general liability policy that provides coverage for claims arising from property damage and bodily injury, a D&O policy specifically provides coverage for a “wrongful act,\u201d such as an actual or alleged error, omission, misleading statement, neglect or breach of duty. A D&O policy provides defense costs and indemnity coverage to the entity listed on the policy declarations, which may include the following:Coverage for individual directors and officersReimbursement to the organization for a contractual obligation to indemnify directors and officers that serve on the boardProtection for the organization or entity itself. Indemnification provisions are typically included in the charter or bylaws of a corporation. While an important risk component, small to midsize privately held companies or nonprofit organizations often do not have the financial resources to fund the indemnity provisions, making the bylaws hollow. A Directors and Officers insurance policy can provide an extra blanket of security in the event of a covered loss.A \u201cfraud\u201d exclusion is typically included in a D&O policy, which eliminates coverage for losses due to dishonest or fraudulent acts or omission, or willful violations of any statute, rule, or law.The following is a list of additional forms of coverage to protect directors and officers:Entity coveragePayment priority for insured personsSeverability of the insured as well as severability of the applicationCoverage over time, meaning the coverage responds to past, present and future directors and officersPay on behalf clauseDuty to defend clauseAdditionally, some Directors and Officers insurance policies can be endorsed to provide employment practices liability (EPL) coverage and\/or trustee liability: While EPL endorsements under a D&O policy broaden coverage, they often do not provide a duty to defend clause and are subject to a substantial deductible. Many EPL endorsements do not provide for a separate limit of liability in addition to the limit available under the D&O policy. If the D&O limit is reduced or exhausted by payment of an employment practices claim involving the wrongful conduct of an employee, a director\u2019s or officer\u2019s personal assets may be at risk.Fiduciary liability provides coverage for liabilities arising out of the Employee Retirement Income Security Act (ERISA), where fiduciaries can be held personally liable for losses to a benefit plan incurred as a result of alleged errors, omissions, or breach of their fiduciary duties. Considerations for NonprofitsAccording to the Nonprofit Risk Management Center, nonprofit organizations often report some difficulty in affording D&O insurance. To minimize the annual premium, they recommend choosing only those policy provisions considered most critical. If affording a lump sum premium is a concern, inquire about the availability of premium financing. To defray the cost of premiums, some nonprofit organizations consider charging board members a portion of the policy cost. We\u2019re Here to HelpWhether you\u2019re a nonprofit, privately held or public company, both you and your business can benefit from a D&O policy. Since there is no such thing as a \u201cstandard\u201d policy, a professional agent is invaluable when purchasing D&O coverage.Call us today at 732-649-1600 to learn more about the appropriate protection for you and your company against potential directors\u2019 and officers\u2019 liability."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"2019","item":"https:\/\/blinsuranceadvisors.com\/2019\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"06","item":"https:\/\/blinsuranceadvisors.com\/2019\/\/06\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"24","item":"https:\/\/blinsuranceadvisors.com\/2019\/\/06\/\/24\/#breadcrumbitem"},{"@type":"ListItem","position":4,"name":"Directors and Officers Insurance for Corporations and Non-Profits","item":"https:\/\/blinsuranceadvisors.com\/2019\/06\/24\/directors-and-officers-insurance-for-corporations-and-non-profits\/#breadcrumbitem"}]}]