There are companies that buy coverage without a full understanding of just what the policy offers. There may be some confusion as to what you are provided under a director and officer’s liability policy and an errors and omissions policy. While the coverages do have certain similarities they don’t provide the exact same detailed coverage. We’ll attempt to break down the debate of d&o vs. e&o.
Directors and officers (D&O) coverage responds to claims against directors and officers when they are sued for their actions, or inaction, of their duties. D&O insurance is built specifically to respond to claims against the executive level directors and officers. Medical Directors that report directly to a board of directors and/or officers will need errors and omissions (E&O) coverage, often in addition to any medical professional liability insurance they carry.
Who benefits from D&O coverage?
Directors and Officers, such as a board, CFO, CEO, and COO, or an entity appointed to make operating decisions for a practice will need D&O coverage to avoid being held financially responsible for their decisions. These decision-makers hold a fiduciary responsibility to the practice and their personal assets could be in jeopardy if they are faced with a lawsuit without D&O coverage in place. Spouses may also be covered on a D&O policy as they could be named in a lawsuit as a co-owner of the director’s or officer’s assets.
E&O policies are intended to respond to a wide range of healthcare consultant claims that don’t necessarily result from direct patient care, including but not limited to copyright infringement, personal injury (libel and slander), and alleged or actual negligence of the duties of an insured.
For example, if a medical director hired by a nursing home is deemed negligent in performing his or her duties resulting in a loss in profits from high turnover then the nursing home may choose to sue the medical director. The E&O policy will be used to respond to this claim.
This hopefully clears up the d&o vs e&o discussion, but discuss any questions or concerns with an agent that has knowledge about these two dynamic policies.