When looking at Directors and Officers Insurance v. Professional Indemnity, it’s important to understand how each type of insurance protects your business. Professional Indemnity insurance, also known as Professional Liability or Errors and Omissions, is a type of insurance that protects your business in the event of allegations that you have either failed to provide the promised services or provided them in a way that brought harm to the client. While this type of insurance applies to any representative of the business and the business itself, Directors and Officers Insurance specifically protects the management team from claims made against their management practices.
Directors and Officers Insurance helps fill in the gaps left by Professional Indemnity coverage and applies only to your business’s decision makers. It protects them from personal liability if a claim is made against them specifically concerning a management decision. When starting a business, it’s tempting to simply examine Directors and Officers Insurance v. Professional Indemnity in an effort to decide which one is best, but the two types of coverage actually complement one another. While both policies protect your business from allegations of wrongful acts, Directors and Officers Insurance adds another layer of protection for your management team and eliminates any loopholes left by having only Professional Indemnity coverage.