Today’s litigious society makes your director’s liability insurance more important than ever before. Also known as errors and omissions (E&O) insurance, this policy is a line of defense against lawsuits that happen when directors are accused of wrongdoing. It covers the costs of a legal defense and potential settlement. However, if you and the directors of your company aren’t aware of the limitations and exclusions of your policy, your business may find itself in a lot of trouble.
E&O insurance does not cover criminal activities. Your policy will probably have a list of activities that aren’t covered by the policy, and it’s important to understand those limitations. If you do get sued, you don’t want to be surprised when you aren’t covered. Work with your insurance agent and company to understand your policy and minimize the gaps in the coverage.
Director’s liability insurance is there to protect the future of your organization. Whether the directors are volunteers who serve a nonprofit or C-level employees and managers of the business, they do make mistakes and need to be covered in the event of an unhappy client. People today are quick to turn to the courts for compensation for their losses. Make sure your business is protected when you have the policies that fit your needs.