Directors and Officers Insurance

January 3, 2013

Insurance for Directors and Officers

Directors & Officers Insurance (D&O) insures corporate directors and officers against claims alleging financial loss arising from mismanagement. The policies contain two types of coverage: the first reimburses your organization when it is legally obligated (typically by corporate charter or state statute) to indemnify corporate directors and officers for their acts; the second provides direct coverage to directors and officers when the organization is not legally obligated to indemnify them.
It is an important coverage, and with lawsuits and damages on the rise, it may be time for you to consider transferring your risk to an insurance company.  Below are some specific reasons for purchasing a D&O policy:

  1. Non Profit Director and Officer boards can be sued by donors, employees (prospective, current or former), the general public, third parties, clients, and/or government agencies.  If this happens, the personal assets of the individual board members are at stake! Directors & Officers (D&O) insurance can help protect a board member’s home, investments, or other personal assets.
  2. The bylaws of the Non Profit may indemnify the Board but does not guarantee the entity has the resources to fund the cost of a claim. The financial backing of a Directors & Officers policy will ensure financial solvency to the organization.
  3. Directors and Officers lawsuits can have a devastating impact on the operating budget of the Non Profit organization, and can even put the entity out of business.
  4. The average cost of a Directors and Officers policy is often around $1,000 but the average cost of a claim is over $100,000.
  5. The Internal Revenue Service has increased their scrutiny of Non Profits. Over 400 private foundations have been audited in the past year.
  6. Directors of Non Profit boards have the same fiduciary duties as corporate board members. Non Profit Directors and Officers lawsuits may involve a variety of issues related to the daily operations of the board including:
    • Duty of Care – requires Directors and Officers to act prudently and reasonably in regard to the management of the organization’s affairs
    • Duty of Loyalty – prohibits Directors and Officers from using their position in the organization to further their own personal interest
    • Duty of Obedience – requires Directors and Officers to ensure that the organization is run in accordance with it’s charter and bylaws, and that the organization complies with applicable laws

WE’VE BEEN AROUND YOUR MARKET:  As an independent insurance company, we’ve been around for over 75 years.  We have over 30 years of experience working with directors and officers coverages and we have access to many qualified insurance carriers who can offer you the best prices and the best coverage for your type of operation.

DISCOUNTS, DISCOUNTS:  Of course there are discounts available on directors and officers policies.  If you’re not getting all your entitled discounts within your present policy, you should be.  Talk to us.

OPTIONS and MORE OPTIONS:  We have plenty of options available to suit your particular situation and operation.  We can provide at least 4 competitive bids from major insurance companies.  Let us shop around so you can compare. Talk to us.

A DIRECTOR AND OFFICER INSURANCE ASSESSMENT TOOL:  We know that your time is extremely valuable so we have developed an ultra-efficient and simple assessment tool to collect the facts we need for a quote.  We call it an assessment checklist but it’s also a best practices tool and we use it with insurance companies to get you the very best rates possible.  We’ll give you a copy.

You can call me at (503) 357-7111, x-7716

Send me an e-mail:  Brian@pacificinspartners.com

Get a quote online by clicking here and I will get back to you right away.

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