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Protecting leadership roles

What Is Directors and Officers Liability Insurance?

Directors & Officers Liability Insurance offers financial protection to the directors and officers of a company when faced with legal action. Lawsuits are typically initiated in response to alleged failures of directors or officers in fulfilling their duties concerning the company or a non-profit board.

Directors & Officers Liability Insurance may encompass Employment Practices Liability and Fiduciary Liability. Of the two, Employment Practices Liability is often considered the most crucial as it provides protection against claims of harassment and discrimination.

Why Is It Vital?

There are several compelling reasons to have Directors & Officers Insurance. Firstly, claims may be directed at both the company and its directors by stockbrokers, employees, and clients. Given that a director can be held personally accountable for the company’s actions, most directors and officers seek protection rather than risking their personal assets.

Investors, particularly Venture Capitalists, often require evidence of Directors & Officers Liability Insurance as a condition for funding your company. Furthermore, having employees exposes management to employment practices lawsuits, which can frequently be covered under Directors & Officers Insurance.

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