Organizations face liability exposures from multiple angles, including incidents where someone is injured while at your company, an employee's misjudgment resulting in property damage to a client, or incorrect advice leading to a professional liability claim.
Unfortunately, claims against a company may not stop at the business itself but also extend to its leadership team and their personal assets. Directors’ and officers' insurance can help protect the senior leadership team making decisions on behalf of the company.
What is NH Directors and Officers Insurance?
Directors and officers (D&O) insurance is a type of insurance coverage typically purchased by businesses to protect the personal assets of the company's leadership team, who may be personally sued for acting on behalf of the company.
It can also protect the business itself from legal fees, settlements, and other costs from lawsuits related to their actions.
As a potential suit can be made against the senior leaders of a company from customers, employees, investors, competitors, and other parties, protecting these key individuals is not just smart; it may help attract better talent to your organization.
Who Needs Director's and Officer's Insurance?
Director's and Officer's Insurance is available for senior leadership positions for many organizations, including:
- Businesses - including those with presidents, vice presidents, directors, or C-level executives (such as CEOs, CFOs, etc.) or with an advisory board of directors.
- Condo Associations- including those with boards including its members, chairs, and trustees
- Nonprofits- including those with fiduciaries, treasurers, and board members
What types of Claims are Typically Covered by Director's and Officer's Insurance?
Generally speaking, D&O insurance might help leaders defend themselves against allegations that their decisions or actions materially harmed the company. Coverage might apply to lawsuits over the following:
- Misleading statements or misrepresentations
- Misappropriation of company finances
- Decisions resulting in bankruptcy
- Breaches of any fiduciary responsibilities
- Poor corporate governance
D&O is not intended to cover poor business decisions, and there are exclusions for any intentionally harmful actions (e.g. fraud or embezzlement). Protection may apply to a range of situations where a leader might make an unintended -- but costly -- error.
3 reasons for D&O insurance
1. Bringing onboard more leaders
At some point, your business may need to add more senior leaders. This might mean high-level outside hires, promoting experienced employees, or bringing in new partners. However they’re added, more leaders means more potential for costly mistakes.
As a general guideline, insurance becomes more important as risk exposure increases. Adding on leaders is often enough reason to get (or increase) D&O insurance.
2. Decisions can be costly
For growing businesses, the potential cost of a serious error can be especially high. More stakeholders could be negatively impacted, more funds could be mismanaged, and also opportunity costs of missed growth.
When the stakes become higher, insurance again becomes more important. It’s not just you who’ll be negatively impacted if there’s a major error at the senior leadership level.
3. You need to recruit good leaders
Running a successful business requires having strong leaders in senior positions. Recruiting top-level business leaders can be difficult if there isn’t D&O insurance in place.
More experienced business leaders often understand the personal risks that senior positions present, and they might be hesitant to accept a position without protection against the personal risks. It’s D&O insurance that can provide the protection.
Find D&O insurance for your New Hampshire business
If you have an organization that could benefit from D&O coverage let us know. Our independent agents can help protect your organization and those who keep it running.
