In part 1, we discussed the basic coverage offered by D&O insurance.  This section will cover basic policy exclusions and the importance of adding this coverage to your school.

What’s Excluded?

Standard exclusions in a D&O policy typically include:

• Fraud.
• Personal profiting.
• Accounting of profits and other illegal compensation exclusions.
• Pending and prior litigation.
• Prior (late) claim notice.
• Bodily injury/property damage.
• Insured versus insured claims.
• ERISA.

The Added Value of Protecting Company Leaders

Aside from paying for claims against school leadership, there are several other benefits to carrying directors and officers liability insurance, including a school’s ability to:

• Retain Strong Leaders—Many potential directors and officers will be reluctant to join your business if exposed to personal liability. D&O liability insurance helps address this issue.
• Attract Investment—Venture capital and private equity firms often require companies to have D&O coverage before investing.
• Cover Legal Fees—Even if directors and officers are exonerated of wrongdoing, your business may incur substantial legal fees in responding to a lawsuit against your leadership. If you have a D&O policy, your company’s legal fees will likely be covered.

There are several D&O policies, defined by what liabilities, legal costs, and other exposures are covered. You should select coverage based on risks and how your school is organized. Your school’s bylaws or articles of incorporation may provide certain protections—or indemnification—for directors and officers. You should seek guidance from your insurance professional about this somewhat complex, technical type of insurance.