Directors & Officers Liability Insurance

In Massachusetts, Directors & Officers liability insurance provides liability protection for directors and officers should a claim be made against them while they’re serving on a management board of a company. Some types of organizations that might benefit by D&O coverage include:

  • Privately held firms
  • Not-for-profit companies
  • For-profit companies
  • Educational institutions

It is important for business owners to consider obtaining a D&O policy to assure they will be covered if there’s a claim.

What does a D&O policy cover?
D&O insurance generally covers organizations and its directors, officers, and trustees against actual wrongful acts in three areas:

Governance liability: Claims resulting from general governance decisions

Fiduciary liability: Claims resulting from alleged fraud and improper financial oversight

Employment practices liability. The most common types of employment practices claims are: sexual harassment, gender and racial discrimination, retaliation, whistleblowers, defamation and failure to accommodate.

These policies generally cover the executive director and a few other key employees. They typically do not include staff and volunteers.

What is excluded from a D&O policy?
There are limitations to what a D&O policy covers. It does not cover issues covered by a different policy. Some examples include:

Bodily injury claims – Covered under a general liability policy.
Property claims – Covered under property insurance.

What kinds of lawsuits are covered under a Directors & Officers policy?
There are typically two kinds of lawsuits that might be brought against a board member. These are derivative lawsuits and third-party lawsuits.

Derivative lawsuits – claims made against a board member on behalf of the corporation. Derivative claims are relatively uncommon; one example of this type of claim might be a suit involving misuse of assets.

Third-party lawsuits – claims by an employee or person connected with the corporation against the board for a non-bodily injury.

Do you have questions regarding Massachusetts Directors & Officers insurance or wondering if it would be beneficial for your business? Call us today at 781-943-1555!