Do you know exactly what you’re getting when you buy director & officers liability insurance?
If you have a board of directors or officers, you’ve probably thought about protecting them. And you can! Director & officers liability insurance will cover them in the event that any legal issues arise in the course of their work for your company. How does this coverage work? Let’s take a look at the different types of protection a D&O policy can offer.
- A-Side Coverage. What happens if your business gets into a financial pinch and can’t indemnify your director or officer? If they face a liability claim, it will come with legal expenses and possibly a settlement. If your business can’t pick up that tab, your A-side coverage can cover those costs.
- B-Side Coverage. Suppose your company is able to indemnify your director or officer. While that’s good news for that individual board member, it’s not good news for your bottom line. Fortunately, B-side coverage can step in to cover that cost for your business.
- C-Side Coverage. Your D&O policy can protect your business as well as your individual board members if you include C-side coverage. This protection is also known as entity coverage and it can protect your corporation as a whole. Be advised, though, that including this coverage could reduce the limits of protection for the individuals your policy covers.
Now that you know the different types of director & officers liability insurance, it’s time to combine the ones you need to properly protect your business and your board members. Talk with your insurance agent to make sure you’re putting the right safeguards in place.
Are you getting enough protection from your director & officers liability insurance? For insight into exactly how you need to be covered, contact NorthStar Risk Management & Insurance Services, Inc. We’re experts on D&O policies and can help you understand exactly what kind of coverage you should have for your board.