Directors and Officers Insurance in Connecticut

What is Directors and Officers insurance?

Should senior leaders ever make mistakes that negatively impact their organization in a major way, they might be held liable for the consequences. This is simply a risk that comes with accepting the responsibilities of a senior leadership position. To help protect against such risk, those leading organizations in Connecticut might want directors and officers insurance.

Directors and officers insurance is a particular liability coverage for senior leaders. It may help leaders protect themselves if their decision negatively impacts the organization they lead.

Who in Connecticut can benefit from D&O insurance?

D&O insurance is something that most individuals in senior leadership roles can benefit from. It’s broadly recommended across senior leadership positions within Connecticut businesses and nonprofits. For instance, the insurance is regularly used to help protect:

• C-level senior executives
• Presidents and vice presidents
• Directors and other corporate leaders
• Chairpersons and board members
• Trustees and treasurers
• Fiduciaries

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What sorts of decisions and actions can D&O insurance cover?

D&O policies, depending on their terms, can cover a range of decisions and actions that leaders could be held responsible for. A policy might extend coverage to instances such as the following:

• Misrepresentation
• Misleading statement
• Misappropriation of funds
• Decision resulting in bankruptcy
• Generally poor corporate governance

An insurance agent who knows D&O insurance well can review what decisions and actions a chosen policy would likely cover.

Does a D&O policy cover fiduciary breaches?

Some D&O policies may cover reaches of fiduciary responsibility. As with any specific risk, however, it’s important to review the terms of a chosen policy. Fiduciaries can check policies with a knowledgeable insurance agent to find a policy that’d likely protect them in this way.

What are the “sides” of a D&O policy?

The coverages that D&O policies provide are frequently classified into three main “sides.” Each normally gives a different type of protection:

• Side A: Typically protects against personal financial liabilities that senior leaders have. Should a leader be sued and the organization unable to financially help (e.g. due to insolvency or insufficient reserves), coverage may help with legal defense fees and a settlement.
• Side B: Typically protects against corporate financial liabilities that organizations have. Should a business or nonprofit be sued because of a leader’s action, coverage may help with legal fees and a settlement.
• Side C: Typically protects against securities-related risks that public companies are exposed to. This is less often used by private businesses with similar risks.

How is D&O coverage handled during a merger?

It’s especially important to make sure D&O coverage is properly in place throughout a merger. This is a time when leaders often face increased risk, due to the increased impact that their decisions could have. A merger is also a complex situation to make sure coverage is in place for.

Before a merger or acquisition, organizations should work with a specialized D&O insurance agent. A specialized agent should be able to set up policies so that coverage is in place throughout the process.

Who pays for a leader’s D&O coverage?

Although D&O coverage often protects leaders, it is common practice for the organization to pay premiums. This is because the need for coverage arises from the leader’s role within the organization.

To find an affordable policy that provides the needed protections, organizations can shop around with an independent insurance agent. An independent agent is able to check quotes from several different insurance companies.