What Is Directors & Officers Liability Insurance?

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Text, Travelers. Directors and Officers Liability Coverage

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SPEAKER: If you think there's a clear separation between your business and your personal assets, think again. Everyday, with every decision, a company's directors and officers put everything they have at risk because, in a directors and officers liability claim, even personal assets may be fair game.

It doesn't matter if your company's stock is not traded on an exchange. If your business provides a service or product, you and your fellow directors and officers could be sued by vendors, customers, employees, competitors, and even government regulators. And these cases can be costly not just in settlements, but in legal fees and disruption to your business. Civil court trials are typically set for a year or 18 months after being filed, and they take longer to resolve. It happens.

Take the small electronics company that attracted four employees from a larger competitor. The smaller firm soon began selling products similar to their rivals, but at a lower price, prompting the bigger business to sue the directors and officers of the smaller firm for stealing trade secrets and customer lists. After two and a half years, the case was settled for more than a million dollars. And defense costs hit $500,000.

Then there's this. After selling a coin-operated laundry business, the former directors and officers were sued by the new buyer who claimed that the business used false profitability information to clinch the deal. The buyer demanded that the agreement be scrapped and all losses be reimbursed. Together, the legal fees and the settlement reached $725,000.

Sobering stuff, especially when a company can't always reimburse its directors and officers for these costs. No wonder organizations continue to place a high priority on extra protection. Having the right coverage in place isn't just the key to protecting your company, your directors and officers and their assets, it can be critical to attracting and retaining the
quality of talent your business demands.

With risks like these and those yet to be discovered, you need an insurance company that can help protect and prepare you for what may come your way. That's why directors and officers liability coverage isn't a maybe, but a must have.

Talk to your independent agent to make sure you have the right coverage in place to help protect your business.

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Travelers Casualty and Surety Company of America and its property casualty affiliates. One Tower Square, Hartford, CT 06183 This material does not amend, otherwise affect, the provisions of any insurance policy issued by Travelers. It is not a representation that coverage does or does not exist for any particular claim or loss under any such policy. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy provisions, and any applicable law.

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Text, Travelers. Nonprofit Directors and Officers Liability Coverage

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SPEAKER: You serve as a director or board member of a nonprofit organization because you care about the mission, the people, and the community. But good intentions cannot protect you if your nonprofit issued. It's not just the organization that's at risk, because in the directors and officers liability claim, even your personal assets may be in jeopardy. Depending on state law, your money, your house, your car, everything you worked for, could be threatened.

Many directors and officers believe that they are protected by charitable immunity laws. What they may not realize is that while these laws may protect them from an adverse judgment, they are not protected from incurring substantial defense expenses on their own, if they are sued personally. Hiring an attorney, if you can find the right counsel to take your case, can cost you anywhere from $200 to $1,000 an hour. And lawsuits happen a lot, and can come from vendors, donors, competitors, employees, and even government regulators. And nonprofit organizations filed twice as many DNO claims than public and private companies.

Consider this-- a museum advertised an upcoming art exhibit. The museum website included photos of the art to be displayed, as well as the names of the artists and artwork, but several artists promoted on the site were not part of the exhibit. Those artists filed suit, and demanded damages as they had not given the museum permission to advertise their work. The museum incurred defense expenses exceeding $85,000, and damages exceeding $175,000.

In another case, regulators took action against the president of a nonprofit organization for misusing federal grant money during his 10 years with the organization, allegedly to support a second family. The organization denied any knowledge of the misuse and fired the president. The ex-president agreed to pay restitution. Defense costs exceeded $300,000.

Your nonprofit organization needs protection in place so you can confidently carry out your mission and attract high-quality board members. With risks like these, and those yet to be discovered, you need an insurance company that can help protect and prepare you for what may coming your way.

That's why nonprofit directors and officers liability coverage isn't a maybe, it's a must-have. Talk to your independent agent to make sure you have the right coverage in place to help protect your organization.

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Talk to your independent agent today.
Travelers dot com
Travelers Casualty and Surety Company of America and its property casualty affiliates. One Tower Square, Hartford, CT 06183 This material does not amend, otherwise affect, the provisions of any insurance policy issued by Travelers. It is not a representation that coverage does or does not exist for any particular claim or loss under any such policy. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy provisions, and any applicable law.