In a business or organization, directors often bear heavy responsibilities, which sometimes involve risks. When they make mistakes, they can be held personally liable by law for damages (material or otherwise) to others. Examples include: physical damage from a workplace accident or financial damage from working with a subcontractor who turned out to be unreliable.
As a company or NPO, it is therefore a good idea to take out directors' liability insurance. This protects all your directors: the insurance covers damages and often also the costs of defense. This way, they do not have to pay for them personally.
To be clear, do not confuse directors' liability insurance with directors' insurance and professional liability insurance.
A driver's insurance policy insures the driver of a vehicle.
Professional liability insurance protects a company's assets when it causes damage to third parties due to an error.
A director's liability insurance policy shields an organization's director from personal expenses when held liable for damages.
Disclaimer
This page is part of a lexicon and does not provide product information or contractual details on insurance services. For specific information, please refer to the official documentation or contact your insurance agent.
