People who lead organizations have substantial responsibilities, and those responsibilities sometimes come with increased risks. Specifically, leaders may be held financially responsible for errors they make that negatively impact the organization they’re in charge of. Directors and officers insurance policies can help leaders who oversee Massachusetts-based organizations from some of the liability risks that accompany their responsibilities.
Directors and officers insurance policies are specialized professional liability policies that uniquely meet the risk mitigation needs of people who are in leadership roles. As is the case with other forms of liability insurance, these policies will typically cover legal defense fees and settlements if a leader faces a covered claim.
Most anyone who has a significant leadership position within an organization in Massachusetts might benefit from the protections that D&O insurance affords. This includes both leaders of for-profit businesses and not-for-profit organizations, leaders of both types of organizations may be held responsible if they make a major error.
Some specific examples of leadership positions that people might want D&O insurance coverage for include:
Anyone who’s unsure whether their position warrants getting this insurance can speak with a specialized agent for further guidance. An agent who’s familiar with D&O policies will be able to help both leaders and organizations think through the risks that a particular leader is exposed to, and determine whether a D&O policy makes sense for them.
People who lead organizations in a volunteer capacity often can still benefit from having D&O insurance, for a leader’s responsibilities and risk exposure are generally more tied to the person’s position than their salary (or lack thereof).
As is the case with almost any insurance product, the exact incidents that a particular directors and officers policy covers are determined by that policy’s terms, conditions and exclusions. Depending on these details, a policy might cover something like a(n):
Importantly, insurance coverage doesn’t grant leaders a license to commit actions such as these. If they do, however, a policy could help protect them from civil lawsuits and penalties.
Additionally, generally poor business decisions normally aren’t included within a policy’s protections. While policies provide coverage for many incidents, failure to foresee market changes or adapt to competition usually isn’t one of those incidents. Things like these tend to be part of a leader’s job and not something that’s insured against.
Who pays for a directors and officers policy can be a matter of negotiation between leaders and their organizations, but it’s fairly common for organizations to cover the full cost of premiums. Since leaders need this insurance because of the role they assume for an organization, it’s somewhat customary for the organization to offer its leaders protection when possible. Paying for insurance is one way that organizations can do this.
For help selecting directors and officers insurance that will protect yourself or the leaders of your organization, get in touch with the independent insurance agents at Roger Keith & Sons Insurance. Our agents have worked with many Massachusetts organizations, and we’re ready to help yours find a policy that will protect the organization’s leaders well.