Typical Policy Exclusions for D & O Insurance

You may know the value that D & O insurance offers to your business. You may know that it aids in minimizing the financial risks associated with your directors and officers, those overseeing and managing your company. However, many of today’s business owners simply do not realize that some policies can be lacking, not offering the complete coverage you need.

Before you agree to a business insurance policy like this, learn what it includes—but also what it specifically excludes. In many situations, you can add onto your policy to minimize those risks when necessary.

Coverage Through D & O Insurance

Overall, D & O insurance protects those at the top of your company from many types of losses. It provides a level of legal defense coverage to help the individual to fight against claims made against them. It is a type of liability insurance that protects against losses related to legal actions taken against them when and if they are accused of wrongful acts in the process of running the company. This can include regulatory and criminal claims in many cases. It often covers both civil and criminal actions taken against the individual.

What It Does Not Cover

Most policies have limits and D & O insurance does as well. A key area that it does not cover, in fact, is illegal acts. If a board member is responsible for taking illegal acts against others, this policy is not likely to cover claims when the individual is found to be guilty of them in a court of law. These policies often include an “insured versus insured” exclusion. The goal of this exclusion is to prevent situations of collusion, when a director could sue the company and collect the insurance.

It is always important to know the details of any business insurance policy you have. Nearly all insurance policies will have some listed exclusions, or types of claims they do not cover. If these are risks to your company, it may be possible to modify the insurance plan now, before a claim occurs, to provide that level of protection you likely need. Work closely with your insurance agent to minimize these risks and improve your business security in the process.