Which coverage best protects individuals serving on a board from lawsuits due to board duties?

Which coverage best protects individuals serving on a board from lawsuits due to board duties?

• A. not accepting compensation.
• B. homeowners policy.
• C. a directors and officers insurance policy.
• D. a liability umbrella policy.

Answer: (C)

Directors and Officers insurance is designed to protect individuals serving on a board from liabilities arising from their governance duties. It covers defense costs, settlements, and judgments related to claims of breach of fiduciary duty, mismanagement, and errors or omissions in decision-making performed in the board role. This specialized coverage addresses the specific risks board members face, helping shield their personal assets when lawsuits arise from board activities. Not accepting compensation doesn’t provide liability protection; a homeowners policy covers residence-related risks and typically excludes business or governance activities. A liability umbrella policy adds excess protection for personal liability from everyday activities but generally doesn’t cover claims arising from board service, which requires D&O coverage.

Directors and Officers insurance is designed to protect individuals serving on a board from liabilities arising from their governance duties. It covers defense costs, settlements, and judgments related to claims of breach of fiduciary duty, mismanagement, and errors or omissions in decision-making performed in the board role. This specialized coverage addresses the specific risks board members face, helping shield their personal assets when lawsuits arise from board activities.

Not accepting compensation doesn’t provide liability protection; a homeowners policy covers residence-related risks and typically excludes business or governance activities. A liability umbrella policy adds excess protection for personal liability from everyday activities but generally doesn’t cover claims arising from board service, which requires D&O coverage.