Leaders take on significant responsibilities, and sometimes there are potential risks that accompany those responsibilities. Specifically, those who lead organizations may be held responsible if they may an error in their leadership that negatively affects the organization or others. Directors and officers insurance can help protect leaders who are in charge of Massachusetts organizations from some of the risks that come with their positions.
Directors and officers insurance is a unique type of professional liability insurance that’s designed specifically for organizational leaders. Like other liability policies, these policies typically cover legal defense fees, settlements and judgements arising from covered claims. In most cases, they’ll begin paying covered costs when a claim is filed and before it’s fully resolved.
Many people who lead Massachusetts organizations could benefit from the protections included in D&O insurance policies. Board members, chairpersons, executives, senior managers and others who have an oversized impact on their organization might want coverage.
Moreover, leaders may need coverage regardless of whether they oversee a for-profit or not-for-profit organization. Leaders of both types of organizations might be held responsible for their actions.
Many volunteer leaders who guide nonprofits may want to consider protecting themselves with D&O insurance. Even though some state laws may provide certain protections for leaders who are unpaid, these protections often aren’t the same as those that are offered by insurance. Thus, purchasing a policy can give volunteer leaders valuable additional protections.
Volunteers who are unsure whether this form of insurance is appropriate for them should speak with an insurance agent who specializes in these policies. After discussing a volunteer leader’s particular situation, an agent can make an informed recommendation regarding coverage. If a policy is appropriate, they can also assist with the process of selecting one.
Because the protections offered in D&O policies are usually tied to the responsibilities that come with leading an organization, organizations sometimes offer to pay the premiums associated with these policies. Whether an organization does pay for a particular leader’s coverage is between that organization and leader, but it’s often a good gesture and occasionally expected.
Premiums for directors and officers policies frequently vary, but these policies tend to be affordable for both individuals and organizations. The premiums are almost certainly more affordable than the potential cost of a major lawsuit would be.
An independent insurance agent can help leaders and organizations compare quotes for different policies that meet their coverage needs. Unlike captive agents, who tend to be connected with a single insurance company, independent agents generally don’t owe loyalty to any one company. As a result, they’re able to compare coverage and price combinations offered by different insurance companies.
The exact claims that directors and officers policies cover depend on a particular policy’s terms and conditions. Depending on those items, a policy might incidents like the following:
Purchasing a policy isn’t an excuse to participate in these, and a policy often won’t protect leaders who knowingly broke the law from potential criminal charges. Having coverage may, however, help shield leaders from financial consequences that may follow these items.
For help finding directors and officers insurance that meets your personal or your organization’s needs, contact the independent insurance agents at Haberman Insurance Group. Our agents have helped many leaders and organizations in Massachusetts, and we’re ready to assist you.