Directors and Officers Insurance

Directors and Officers InsuranceFor-Profit Directors and Officers Insurance

No two businesses are exactly alike and, depending on their structure and the goods or services they provide, companies operate differently.  What all organizations have in common, though, is that they all have at least one officer and/or director.  While large corporations might have hundreds, and small for-profit businesses might have only one director and officer, whether they are a small convenience store or a large-scale pharmaceutical production company, it is important that businesses shield their leadership from potential legal or financial liability in the event of a loss or claim against their Board of Directors.  They can do this by maintaining the proper commercial policy with directors and officers insurance.  A licensed independent business insurance agent in the area can assist them in choosing the right D&O insurance for their company.

In the course of meeting with an experienced independent insurance agent regarding directors and officers insurance for their company, business owners should expect that an agent will ask about the legal structure of their organization.  She will want to know the number of directors and officers, and their individual work histories and prior experience.  She may also ask about the length of time that each officer and director has served in his or her particular role, and whether any have ever been involved in litigation, or a claim related to the business.  An independent business insurance agent will want to take a look at a for-profit company’s financial records, and may wish to discuss the assets and business property owned by an entity, and used or controlled by its officers, such as corporate jets, real estate, or office furniture.

directors-officers-insuranceAn independent commercial insurance agent will likely want to know about whether a company has had any losses in the past three years, and if so, the amount of any loss, details of the claim and also if a business has ever been cancelled by a former insurer for any reason other than that the insurer stopped writing that class of business.  An agent might ask about whether a company plans to expand or down-size, or to bring in more directors or appoint more officers.  Also, an independent insurance agent will likely ask about the typical tasks of officers in the course of working for a for-profit organization, and about whether they have ever been subject to discipline while serving in their official capacity.

With adequate commercial D&O insurance in place, officers and directors of for-profit companies know that in case of a claim by a shareholder, regulator, or customer, they can be protected from personal liability.  They can also avoid the personal expense of paying to defend against a lawsuit, and can continue to serve as an officer and director during the pendency of such a case.  An independent insurance agent will assist business owners in choosing commercial insurance to keep some of their organization’s most important assets, its directors and officers, secure.

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Non-Profit Directors and Officers Insurance

Non-profit organizations may operate for the benefit of people with a terminal illness, to preserve historic buildings and landmarks, or for the protection of animals.  Typically, non-profits have at least one director and/or officer to manage, oversee, and control the operations of their entity.  Whether a non-profit is a large-scale organization with many arms in different areas, a start-up in an emerging industry, or a small family-run enterprise, its officers and directors play an important role.  To make sure that a non-profit’s leaders can avoid being held personally responsible for a financial loss to their company, or liable for a legal claim against the entity, non-profits should carry quality commercial insurance for their directors and officers.  An experienced independent business insurance agent will help them find the right D&O coverage.

independent-insurance-agent-collision-coverageIn reaching out to a local independent insurance agent for purposes of buying directors and officers insurance, non-profit organization leaders should anticipate that the agent will likely request to meet with them at their place of business.  In the course of meeting with officers, directors, and managers of a non-profit, an agent will probably inquire about the structure of the non-profit entity, including the number of directors, officers, and staff.  He may also ask about how responsibilities and tasks are delegated among the leadership and employees, and might also inquire about the work history of the members of the board of directors, officers, and any permanent staff members.

A licensed independent business insurance agent will likely ask about the bookkeeping practices of a non-profit organization, and may wish to review the company’s financial and income tax records.  He may also ask about whether a non-profit has had any losses or claims in the past few years, and if so, the amount of any loss, or the outcome of any claim.  He might also ask if any of the entity’s current directors and officers have ever been named as a defendant in a lawsuit against the non-profit, and he may want to know if the non-profit has ever been cancelled by an insurer for any reason other than that the insurer stopped writing that particular class of business.


In evaluating the options for commercial D&O insurance for a non-profit, an independent business insurance agent will probably request to tour the offices or other facilities operated by a non-profit, and may want to know about any real estate, or other holdings and assets of an organization.  He might also wish to review items like artwork, office furniture, and electronic equipment of a non-profit to determine what might be deemed a fixture or improvement on the premises, versus what could be considered business property or business personal property under a commercial insurance policy.

With the proper commercial D&O insurance in place, non-profit directors and officers know that in case of a shareholder derivative suit, a claim by a regulator, or an unexpected economic loss, they can be shielded from personal liability and maintain their position while a claim is resolved, or loss, remedied.  By connecting with a local independent business insurance agent, leaders of non-profits know that the commercial D&O insurance they purchase can keep their organization’s directors and officers protected.

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Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.

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