Who is Insured on a D&O policy?
In the past, I’ve had clients call and ask me to add new directors who have just joined their board to their D&O policy. Some leaders believe that the D&O policy has a schedule of named insureds, so I thought a quick video on who is actually defined as an insured on a D&O policy would be helpful.
First, D&O insurance is short for Directors & Officers Liability Insurance. Non-profits commonly purchase it to protect their boards of directors. Still, it’s also purchased by private companies to protect the company’s decision-makers, and it’s purchased almost universally in the public company space.
So, who is named as an insured person on a D&O policy?
The specific definition will change from policy to policy, so it’s important to read your policy or ask your broker to help you find this definition and understand it. Broadly speaking, insured persons in the private company space will include the present, past, and future executives, employees, directors, officers, members of an advisory committee, and the spouses of these individuals. You may also see wording like “for their roles as an executive, employee, officer or director” in some policies.
Again, broadly speaking, coverage is not just limited to the directors and officers of a private company. If you include EPLI or Employment Practice Liability in your management liability policy with your D&O, then individuals such as your HR director or others responsible for that role will be included as insureds for allegations that arise due to employment-related acts such as wrongful termination, discrimination, harassment, etc.
Here’s the bottom line. Every D&O policy is different, this is a non-standard form of insurance, and each policy needs to be tailored for your specific situation. A condo or co-op board needs different protection than a mid-market private firm, and a hedge fund or other firm needs different protection than a non-profit. Having an expert in D&O insurance to negotiate the broadest terms and conditions to your specific needs is critical.
Have questions on D&O insurance or any other form of business insurance? Why not click the button below to get the process started of having a conversation. I promise, no hard-core selling or other nonsense. Just a conversation to see if we can help you with any insurance or risk management issue that’s keeping you up at night. Thanks.