Leaders of organizations are entrusted with substantial responsibilities, and those responsibilities can present a significant personal risk to leaders. Should someone make a decision that negatively impacts an organization, the leader might be sued or otherwise held financially liable for their decision. Directors and officers insurance helps protect Massachusetts organizations’ leaders from risks such as this.
Directors and officers insurance is specialized professional liability insurance for leaders. Like with other liability insurances, D&O will normally pay attorney fees, court costs and settlements that arise from covered claims. In most cases, these expenses will be paid before a covered lawsuit is fully decided.
Most people who hold leadership roles within a Massachusetts organization can benefit from the protections that D&O insurance provides. This includes leaders of for-profit and nonprofit organizations, as both organizations could hold their leaders accountable for a bad decision.
Some examples of professionals who might want this insurance include:
Anyone who’s not sure whether their leadership role warrants purchasing D&O insurance can get guidance from an insurance agent who specializes in these policies. A specialized agent will be able to review a professional’s risk exposure and explain how coverage would help (assuming it would).
Although many leaders of nonprofit organizations are volunteers, overseeing an organization without pay doesn’t exclude leaders from being held financially responsible. Many volunteer board members, presidents and vice precedents should have insurance that protects them.
The exact protections that a directors and officers policy covers are determined by the specific terms and conditions of that policy. Depending on terms, a policy might cover incidents such as:
Coverage for these types of incidents isn’t licensed to commit these actions intentionally, but accidental incidents like these may be shielded from civil penalties and lawsuits by a policy.
Notably, general business decisions normally don’t fall within the scope of a policy. While policies cover many incidents, they generally don’t cover failures to foresee market shifts and/or adapt to changes in the marketplace. Leaders are still usually personally responsible for making informed and good business decisions.
Premiums for directors and officers policies vary depending on multiple factors. The best way to assess cost in a given situation is to compare policies with an independent insurance agent. Independent agents have the freedom to request and show quotes from multiple insurers, and agents can easily customize these quotes for an organization.
Even though directors and officers policies primarily protect the leaders of an organization and not the organization itself, organizations normally pay the premiums for these policies. This is normally because leaders wouldn’t face these risks if they didn’t have their positions within an organization.
For help insuring leaders of your organization, contact the independent insurance agents of Garrity Insurance. Our agents have worked with many organizations in Massachusetts, and we’ll help make sure your organization’s leaders are well protected. We can recommend the best directors and officers insurance policies regardless of what the insurance company offers it since we’re independent.