Directors’ and Officers’ (D&O) insurance is liability insurance for the decisions of the board and other officers of the nonprofit including employees. D&O is designed to pay for legal defense and any award or settlement resulting from decisions such as wrongful dismissal, wrongful discipline, discrimination (age, race, religion, sex etc.), sexual harassment and misrepresentation.
Who is Insured?
The definition of insured person includes duly elected or appointed directors, officers, trustees, employees, or managers of the business. It also extends coverage to spouses and estates of those listed above.
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What is Insured?
For the purposes of simplicity the insurance company defines “Wrongful Act” and then uses it in the below categories. Wrongful acts means any actual or alleges error, misstatement, misleading statement, act, omission, neglect, or breach of duty by an insured individual. It can also mean a breach of employment contract, discrimination, harassment, retaliation, wrongful job action, or other workplace legal incidents actually or allegedly committed.
Side A: Directors, Officers & Corporate Liability
The insurance company will pay for wrongful acts committed by directors, employees and other officers, as well as on behalf of the organization itself.
Side B: Employment Practices Liability
The insurance company will pay in connection with a wrongful act arising from an employment practices claim brought by an employee or arising from a wrongful third party act.
Employment practices claim means a written demand for monetary or non-monetary relief, a civil proceeding, or a formal, administrative, investigative, regulatory or mediation proceeding by a government agency enforcing employment standards legislation.
Side C: Fiduciary Liability
The insurance company will pay in connection with a wrongful act arising from a claim resulting from management or oversight of a benefits program as established under any applicable employee benefit law. This can include failure to notify employees of a plan.
Side D: Outside Executive Liability
The insurance company will pay in connection with a wrongful act by an insured person while serving as an outside person.