The Cost Drivers of Directors & Officers Liability Insurance
Directors and Officers Liability Insurance is a fundamental component of any company’s risk management program. A lack of D&O insurance may dissuade talented individuals from seeking an executive position at your company, as they don’t want to put their personal assets at risk in the event of a lawsuit.
As a savvy business owner looking to protect your bottom line, how do you weigh the cost of insurance to protect your senior leadership with the potential risk of a lawsuit? As regulatory investigations and defense expenses increase, prices for D&O insurance have gone up as well. Corporate indemnification provides the first line of liability protection; but certain circumstances—most notably, if the company goes bankrupt—necessitates that additional protection is offered to directors and officers.
A variety of factors determine the price of a company’s D&O insurance. Some low-risk companies pay pennies on the dollar; others pay a lot more, but they understand it’s a lot less than the expenses they’d incur in a lawsuit. Recognizing the cost drivers of D&O insurance—a company’s exposures, legislation and trends in D&O lawsuits—can help you decide what coverage your company needs to mitigate its unique exposures.
Benefits of D & O Insurance For Nonprofits
California nonprofit organizations provide essential social services that benefit the community and their members. These organizations cannot survive without a board of directors to make major decisions on behalf of the organization. Contact GDI Insurance Agency, Inc to find out more information on California D & O Insurance for Nonprofits 1-209-634-2929.
What Does a D & O Insurance for Nonprofits Policy Cover?
A California D&O insurance for nonprofits policy provides defense costs and indemnity coverage to the entity listed on the policy declarations, which may include:
- Coverage for individual directors and officers
- Reimbursement to the organization for a contractual obligation to indemnify directors and officers that serve on the board
- Protection for the organization or entity itself.
A “fraud” exclusion is typically included in a D&O policy, which eliminates coverage for losses due to dishonest or fraudulent acts or omission, or willful violations of any statute, rule or law.
GDI Insurance Agency, Inc. is Here to Help
Whether you’re a nonprofit, privately held or public company, both you and your nonprofit can benefit from a D&O policy. Since there is no such thing as a “standard” policy, a professional agent is invaluable when purchasing D&O coverage.
Call us today at 1-888-991-2929 to learn more about the appropriate protection for you and your company against potential directors’ and officers’ liability.
Company Characteristics and Exposures
Even when acting in good faith, directors and officers of nonprofit expose themselves to risks with each decision they make on behalf of their organization. In the event of a claim, nonprofit leaders could suffer severe damage to their reputation and personal finances simply based on their decisions. In order to protect themselves, directors and officers or D & O insurance for nonprofit leaders is crucial and can provide the following benefits:
Legal Cost Reimbursement:
In the event of a claim, D & O Insurance policies can provide defense cost coverage for a variety of claims. Specifically, D & O insurance can provide legal cost reimbursement to nonprofit leaders following allegations of wrongful acts, financial mismanagement, errors in judgment and negligence. Because D & O Lawsuits can occur without warning and easily reach six figures, it’s critical that nonprofit leaders arm themselves with the right policy.
Peace of Mind:
D & O claims can come from a variety of sources, including employees, recipients of services, government bodies and donors. D & O insurance ensures that nonprofit leaders are protected regardless of where claims originate, providing timely and effective coverage.
Entity Coverage:
A number of D & O policies go beyond protecting directors and officers and extend to the organization itself. This is particularly advantageous, as this type of coverage kicks in even if a director or officer isn’t directly involved in a claim.
Flexible Limits:
Most insurance companies offer a variety of coverage limits for D & O insurance policies. In some cases, these limits can go as high as $10 million, depending on the size of the nonprofit.
Protection Beyond Indemnification
While the bylaws of many nonprofits require the company to indemnify and defend directors and officers who are sued, leaders shouldn’t expect this protection to be sufficient. That’s because a nonprofit’s duty to indemnify is only as good as its ability to pay. This means that, if the nonprofit is insolvent or not financially stable enough to cover the legal fees, directors and officers would have to cover these fees themselves.
Want to Learn More About California D & O Insurance for Nonprofits?
Though you may not realize it, board members can be held liable for the actions of the nonprofit organizations they serve. In order for a nonprofit to protect its company mission and its board member’s personal assets, D & O Insurance is crucial. Contact GDI Insurance Agency, Inc. today 1-209-634-2929 for your quote.
Know What Your Policy Covers
While many companies usually focus on the cost of their D&O policy, understanding the scope of the policy is even more critical. Most D&O policies are renewed yearly, and the terms and conditions can change. Read through your policy carefully. Be aware of the following:
- Look at the limits of your liability. Are they enough to cover your exposures? Companies with a lot of risk exposures usually find that they need more than just the primary coverage, and purchase excess insurance as well.
- Be aware of exclusions; most D&O policies do not cover claims that arise from fraudulent or criminal acts.
- For some insurance carriers, Employment Practices Liability (EPL) insurance and Fiduciary Liability insurance are policies that are purchased separately from primary D&O insurance. Don’t assume they are automatically included in your D&O policy.
For more information on D&O coverage options for your company, contact GDI today.
Considerations for Nonprofits
According to the Nonprofit Risk Management Center, nonprofit organizations often report some difficulty in affording the cost of D&O insurance. To minimize the annual premium, they recommend choosing only those policy provisions considered most critical. If affording a lump sum premium is a concern, inquire about the availability of premium financing. To defray the cost of premiums, some nonprofit organizations consider charging board members a portion of the policy cost.
Learn About the GDI Client Philosophy!
Safety and Compliance
- Employee Manual
- Base Safety Programs
- Human Resources
- Employee Training
Insurance & Risk Management
- Basic Policies - Liability
- Basic Policies - Employee Benefits
- Employee Benefits
- Contractual Transfers
Maximization of Efficiencies
- Accounting & Taxation
- Legal Guidance & Council
- Safety & Training
- Specialized EPA Inspections & Certifications
- Inspection Assistance
- Insurance Visit Support
If You Think This Sounds Too Good To Be True, Here Is What Just A Few Of Our Clients Have To Say about their Insurance:
"“…$385,000 less a year than we were paying
We looked hard at all our budget items, and insurance seemed to be a big fixed expense. GDI found us a policy for $385,000 less a year than we were paying”
-CA Home Builder
"…found me coverage for $140,000 less a year
When everyone else said that was the best they could do, I called GDI, and they found me coverage for $140,000 less a year than anyone else offered.”
-CA Cement Contractor
GDI Insurance Agency, Inc. Your Trusted Business Insurance Experts
At GDI Insurance Agency, Inc. we will do the work for you to ensure you have the best protection plan for your California business automobiles. Not only that, but as you can see, we will go the extra mile to make sure your business is protected from the inside-out.
Located in Turlock, CA we have offices throughout California’s Central Valley, Northern California and beyond.
To put the GDI Insurance Agency, Inc. experts to work for you, simply fill click our quote button above or call our office today at 1-888-991-2929 to learn more about GDI’s D & O Insurance Program!
