When we talk with clients about Arizona Directors & Officers Liability Insurance, we are referring to a professional liability policy whose coverage provides protection for past, present, and future directors and officers of for-profit companies, privately held firms, nonprofit companies, and educational institutions from damages resulting from acts alleged or actual wrongful acts the directors and officers may have committed in their positions with the company.
This type of professional liability policy provides protection in case there is any actual or alleged error, omission, misleading statement given, or breach of duty. In effect, the policies function as “management errors and omissions liability insurance,” covering claims resulting from managerial decisions that have adverse financial consequences. When a company assembles a board of directors, it is a wise business investment to acquire Directors & Officers Liability Insurance coverage. If your company has investors, more than likely a condition will be written into a contract providing funding so that the company will have Arizona Directors & Officers Liability Insurance coverage.
Please note that this type of policy is NOT Errors & Omissions Liability Coverage. Many times clients confuse Directors & Officers Liability Insurance with Errors & Omissions Liability Insurance. The two types of insurance coverage are not synonymous. Arizona Errors & Omissions Liability insurance is concerned with performance, failures, and negligence with respect to your products and services, not the performance and duties of management.
Companies such as consultants, insurance brokers, and accountants, to name a few, carry this type of insurance. We encourage these clients that it makes good business sense to carry both Arizona Directors & Officers Liability Insurance and Arizona Errors and Omissions Liability Insurance, if needed.