In today’s evolving litigation environment, every person who serves as a director, officer, Public Official or Administrator whether their company or public entity is large or small, for-profit or nonprofit, is a potential target for litigation. These individuals may be personally liable for the decisions they make, potentially resulting in devastating damages and expenses.
The organization purchases Directors & Officers liability insurance, but it protects personal assets of people who serve on the board, or as officers or elected or appointed officials of the organization.
Below we outline important features that should be included in your organization’s D&O policy. Please note that this is a general overview of the coverage and is not intended to be a comprehensive guide.
Wrongful Acts The D & O policy should have wording that indicates it will pay on your behalf as an insured for claims arising out of wrongful acts. A broad definition of the term “wrongful acts” includes Errors & Omissions, Wrongful Employment Practices, Wrongful Personal Injury (including discrimination) and Publisher’s Liability.
Claim - Your policy should include a broad definition of Claim that includes (1) civil, criminal, or administrative adjudicatory hearing; (2) a written demand for monetary damages or non-monetary relief; or (3) an Equal Employment Opportunity Commission proceeding or any state, local or territorial equivalent.
Loss - Loss definition should include “damages, settlements and Defense Costs.” The loss also includes punitive, exemplary or multiple damages, if insurable, to the fullest extent permitted by any applicable law.
Broad Insured - Who is Insured in the policy should include the Named Entity (the nonprofit), qualified subsidiaries and individual insureds. Individual Insured includes all past, present, and future elected or appointed directors, trustees, officers, employees, committee members or volunteers of the organization, including their estates, heirs, legal representatives or assigns.
Property Manager (included upon request) - For condos and housing cooperative, the policy should give you the option of insuring the Property Manager for both (1) acts as a property manager for the community association and (2) where sued vicariously for the acts of the association board.
Severability - Profiting, fraud, or criminal acts of one Individual Insured will not be imputed to another to preclude coverage. Further, the failure by one Insured to disclose in the application facts and circumstances which may give rise to a future claim will not be imputed to another insured to preclude coverage
Important Policy Conditions -
Cancellations - Insurer cannot cancel the policy, except for failure to pay a premium.
Extended Reporting Period available if canceled by the insurer for purchase at 75% or less of the annual premium for 12 months, and can be purchased up to 30 days post expiration.
Failure to Obtain or Maintain Insurance - Defense of Claims for failure to obtain or maintain adequate insurance.
Spouses -Make Spousal sure coverage is expressly included.
Full prior acts - coverage should be included subject to policy terms and conditions
If you would like more information, we welcome an opportunity to meet with you to discuss this coverage in greater detail.