Full Video Transcript
It is important for all boards of directors to have errors and omissions insurance in case they are sued in their capacity as directors of the company. This insurance should be carried in addition to any errors and omissions insurance that the company carries generally with respect to its products and services.
You should obtain errors and omissions insurance for your board of directors when your board is established. Claims about the board's conduct may come from employees, stockholders, investors, or customers at any time. Errors and omissions insurance can ensure that your personal assets will not be at risk if you are accused of wrongdoing. Typical claims against boards of directors that may be covered by errors and omissions insurance include mismanagement, self-dealing, breach of fiduciary duties, misrepresentation and acting outside of the board's authority.
Many people will require a company to maintain errors and omissions insurance for the board of directors before agreeing to be a board member. Therefore, it is important to consider obtaining this insurance for your company.