Small Business Directors & Officers Liability

Small Business Directors & Officers Liability

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If you lead a small business, you are likely aware that property damage and bodily injury are the mainstays of commercial general liability – otherwise known as CGL insurance. However, you may not be aware that unlike CGL, directors and officers insurance is designed to specifically address what’s known as a “wrongful act” an actual or alleged error, omission, misleading statement, neglect or breach of duty. This is an important distinction if you are renewing or reviewing your small business insurance package.

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A Single Board Vote Can Put Your Small Business At Risk

Because personal credibility, regulatory and directional changes make headlines and generate social media buzz, each and every decision your directors and officers make may be judged by a very public microscope. The success of any small business is tied to transparency and accountability. Should a worst-case situation arise, your small business could find itself facing the uncharted waters of a lengthy litigation as a direct result of decisions made by your board.

The legal cost to defend individual directors and officers is substantial, as are the potential penalties that can impact their personal assets. Your small business directors and officers insurance policy may include:

Providing the best risk protection is an important recruitment and retention tool. Because your directors’ and officers’ personal liability risks are not covered under ANY personal insurance policy — small business directors and officers insurance is an important cornerstone of your risk management strategy.

Did You know?

small to mid-size privately held company &/or non-profit may not have the financial resources to fund the indemnity provisions, making the bylaws hollow.

Typically, indemnification provisions are part of a corporation’s charter and/or bylaws. In the event of a covered loss, an ALIGNED small business directors and officers insurance policy can provide an extra layer of security.

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