General liability insurance may fall short for directors & officers.
Business owners frequently encounter increased liability concerns during the course of day-to-day business. So do start-ups, not-for-profits and others engaged in business. In most cases, general liability coverage provides a level of protection suitable for most unanticipated situations. However, it might fall short in some instances.
General liability coverage often specifically excludes omissions of directors or officers.
Liability coverage for directors and officers, commonly referred to as D & O coverage, bridges the gap by protecting both directors and officers as well as the organization itself from damages.The liability coverage also protects officers and directors from the defense fees associated regulatory allegations.D & O insurance is especially important when attempting to attract directors and officers especially into companies that deal with areas of research and development.
D & O coverage provides some peace of mind for the individual directors or officers. More importantly, D & O provides a valuable level of additional protection to insulate individuals from personal loss in the event of a claim.
Contrary to popular opinion, D & O insurance does not encourage malfeasance since it excludes deliberate acts of fraud or intentional illegal activity.
Instead, it provides protection required to operate in and ever increasing complex business word without fear of reprisal should an accidental omission, mistake or other oversight take place.
In fact, given the number of increasingly litigious environment, D & O insurance is increasingly considered to be imperative for companies of any size.
Research indicates that more than 30% of all companies can expect at least one claim against directors or officers.
Average defense costs of a claim exceed $1 million.
With more than 95% of Fortune 500 companies citing D & O insurance as a core component of corporate insurance, California business owners should no longer considered this coverage as an ”add-on” policy.
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