What is Directors and Officers Insurance?
The people who lead businesses and nonprofit organizations in Massachusetts have a great deal of influence over the businesses and organizations they’re involved with. Because they have a lot more influence than a typical employee, they’re often held to higher standards than most employees. If they make a bad decision or take an inappropriate action, they might be held personally responsible for any consequences of their decision or action. Directors and officers insurance gives leaders a way to protect themselves from the risks they assume when making tough decisions about the businesses and nonprofits they oversee.
Directors and officers insurance is a specialized type of professional liability insurance. It protects leaders of businesses and nonprofit organizations from a variety of risks that are inherent in their leadership roles. Some examples of issues that a policy might provide coverage for include:
- Conflicts of interest
- Bad investment decisions
- Problems related to personnel decisions
- Inappropriate releases of confidential or personal information
- Gross negligence
- Unlawful acts
- Other errors that leaders might make
While a policy may cover conflicts of interest, gross negligence and unlawful acts, a policy doesn’t grant a leader permission to commit these. It may offer financial help for such issues, but a policy usually won’t provide protection from other potential consequences.