How D&O Insurance Financially Protects Your Board Members From Personal Risk in Ann Arbor, MI

Board members and corporate officers provide valuable time and expertise to your organization, but their personal assets can be exposed when decisions come under scrutiny. Directors and officers (D&O) insurance is designed to financially protect both your organization and the individuals who lead it from the financial consequences of lawsuits tied to their decisions.

What Can D&O Insurance Cover?

D&O insurance focuses on responding to situations where a director, officer or other decision-maker faces a claim alleging a wrongful act, mismanagement, breach of fiduciary duty or errors in judgment. While policy details can be customized, coverage may help pay for:

• Legal defense costs, including hiring attorneys and expert witnesses
• Settlements or judgments against covered directors and officers
• Coverage for the organization when it indemnifies a covered leader

Who Needs This Coverage?

Leadership within many organizations, including nonprofit boards, private company executives and for-profit corporate officers, all need to consider personal liability exposure. Regardless of good intentions or even fully volunteering their time, board members and decision-makers are not immune to lawsuits. If your organization makes decisions affecting employees, clients, investors or other stakeholders, D&O coverage warrants serious consideration. In many cases, clients may ask for proof of coverage.

Why Is the Personal Risk Significant?

A named director or officer without D&O coverage may be responsible for paying legal defense costs and settlements from personal funds. Legal disputes involving leadership decisions can be lengthy and expensive, potentially amounting to exorbitant losses and tarnished reputations, regardless of the final outcome. Without insuring them, many qualified leaders may decline to offer their services to your organization due to their personal exposure.

Where to Get a D&O Policy

At Ann Arbor Insurance Associates LLC, our team works closely with organizations in Ann Arbor, MI to find ideal insurance solutions. Contact us today to review your coverage needs and find a D&O insurance policy that’s right for your organization and its leaders.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.