All businesses and nonprofits should be aware their directors and officers can be held personally liable for transactions or decisions (which are not authorized by the bylaws), misappropriation of funds, misuse of funds, making improper loans, knowledge of illegal or improper acts, and fraudulent acts. These are just a few of the things for which directors and officers need special liability insurance.
Directors & Officers (D&O) Insurance provides coverage for legal actions against the directors and officers of a business or nonprofit. As the result of a claim, the coverage applies to amounts that the directors and officers are legally required to pay because of wrongful acts. The coverage can include damages, judgments, settlements and defense costs, but usually excludes fines, penalties, and any other charges considered uninsurable.
Many people believe that incorporation creates some kind of legal veil of limited liability behind, which they can hide. This is not the case. Directors and officers are responsible for their actions and the actions of the business or nonprofit and, in some instances, the actions of other directors.
At SentryWest Insurance, our insurance specialists will work with your business or nonprofit to help find the most appropriate Directors & Officers Insurance coverage, which can sometimes include Employment Practices coverage. We understand the importance of protecting your business or nonprofit and its directors and officers against multiple liability exposures.
