What You Need to Know

    As a startup business, the need for D&O Insurance may not be immediately evident. However, as the company expands and becomes more complex, and as the personal assets of board members grow, the need for D&O Insurance increases. This type of insurance not only protects corporate board members, but also those serving on co-op, condo, or non-profit boards, who may be held liable for unintentional breaches of duty or conflicts of interest.

It's important to note that not all lawsuits brought against a board or individual officer are covered under a D&O Insurance policy, and coverage can vary greatly among policies. In some cases, claims related to employment practices, such as hiring, firing, or promoting, may not be covered under D&O Insurance. In such cases, an Employment Practices Liability (EPL) policy may be necessary to fill the gap.

While a significant proportion of claims filed against boards and individual members are frivolous and ultimately dismissed, legal defense costs can still be significant. This is why coverage for legal defense costs is a crucial component of a D&O Insurance policy. At Phoenix, we strongly recommend that our commercial customers consider obtaining D&O Insurance to protect themselves from the financial burden of personal liability.