Directors and Officers Liability Insurance in NJ

Have you been considering taking out Directors and Officers (D&O) Liability insurance?

Here is a brief guide explaining what it entails and how it can benefit your business.

What is D&O Liability?

Directors and Officers liability insurance is a form of business insurance. It typically protects boards of directors and officers against claims of wrongful acts whilst in office.

Some of these claims may include:

  • Breaches of fiduciary duties
  • Securities litigation
  • Allegations of misrepresentation
  • Criminal activity
  • Discrimination
  • Defamation
  • Negligence

These claims can come from anyone, including employees, vendors, customers, investors and competitors. A D&O policy is intentionally very broad so it can cover a comprehensive number of allegations.

Even if no wrongful act has been committed, this insurance coverage can come in handy if you need to pay for defense costs as a result of company investigations.

Directors and Officers liability insurance typically does not cover claims leading to injury or property damage, they focus more on financial loss claims. Those types of claims tend to be covered under a general liability policy.

Who Is D&O Liability Insurance for?

Any organization that has an officer or a board of directors can apply for Directors and Officers liability insurance. This includes public companies, private companies, financial institutions and non-profit organizations.

An Example

What happens if a board of directors fairly dismissed an employee, but that employee then sues for unfair dismissal?

First, the board of directors must hire a defense lawyer. The case can go on for several months, and although the board of directors may win the case, they burned through company funds in the process.

Having Directors and Officers liability coverage in place before a lawsuit can help offset these costs.

Do I Need It?

Directors and Officers liability insurance is beneficial because it covers such a broad spectrum of claims.

It can save companies and organizations funds in the event of a false claim, helping to cover the defense costs that include hiring an attorney and time spent in court.

D&O liability insurance can protect your business from false claims, investigations or lengthy legal disputes.

Large companies tend to be at a higher risk for such claims, but many small businesses can still benefit from D&O coverage.

If you think you may need Directors and Officers Liability insurance, or you have questions about it, get in touch for our team today.

Get in touch with an insurance expert today.