Who Does Directors and Officers Insurance Cover?

Directors and officers insurance is a policy designed to protect the key employees of your business in case of a lawsuit. But who are your key employees? Is everyone covered who needs coverage?

Most of the rime, directors and officers insurance (D&O insurance) covers the corporate directors, officers and managers of a business. Anyone serving on a board or in a position of power may be added to this type of policy. There are blanket policies that simply cover all of your key employees, but there are also named policies, where you can name specific employees you wish to be covered. A named policy may provide more protection for specific employees than a blanket policy, but it may also limit who is covered. 

Not only employees are covered, either. D&O insurance is designed to cover the personal assets of your employees and their spouses, so your key employees’ spouses can be covered under this insurance, as well. 

Employee Claims Against Employees

If an employee files a lawsuit against their employer, directors and officers insurance may cover the resulting expenses. Make sure that your D&O insurance policy also comes with Employment Practices Liability. Employment Practices Liability Insurance (EPLI) covers claims regarding certain employment practices conducted by directors and officers. This includes claims of discrimination, sexual harassment, wrongful termination, breach of employment contract, negligent evaluation, failure to promote, wrongful discipline, mismanagement of employee benefit plans and more. 

Essentially, if an employee feels that they have been wrongly treated or denied certain rights, they may file a claim against their immediate manager or those above to receive compensation. This can cover previous, current and potential employees. 

Make sure your directors and officers insurance includes EPLI so that all of your key employees have the highest amount of coverage needed.