Recommendations for the Board

Before approaching insurers or brokers, the board should have a clear picture of its specific exposures. What types of decisions are most likely to generate claims? Are there ongoing regulatory concerns, pending litigation or financial pressures that increase the organization’s risk profile? A realistic assessment of actual risk is the foundation of appropriate coverage.

D&O insurance is a specialized line of coverage, and general insurance agents may not have the expertise to identify gaps or negotiate favorable terms. Working with a broker who focuses on management liability – and who can present options from multiple carriers – significantly improves the likelihood of securing coverage that genuinely fits the organization’s needs.

The summary of benefits and the full policy document are two very different things. Pay particular attention to exclusions, retention amounts, the definition of wrongful acts, the claims reporting requirements and how Side A coverage operates independently from the rest of the policy. An exclusion that seems minor in isolation can be decisive when a claim is filed.

An organization that has grown, entered new markets, changed its leadership structure or taken on new activities may have a materially different risk profile than it did when its current policy was written. D&O coverage should be reviewed at every renewal – and more frequently if significant organizational changes have occurred. Standing still on coverage in a changing organization is a risk in itself.