Directors and Officers (D&O) Insurance

1. legal Actions or Fraud: Claims involving personal gain or fraud are excluded, though defense costs are covered until guilt is proven.
2. ERISA Responsibilities: Covered by Fiduciary Liability Insurance, not D&O.
3. Discrimination or Harassment Claims: Covered by Employment Practices Liability Insurance (EPL).
4. Cyber Losses: Hacking, malware, and ransomware are covered by Cyber Liability Insurance.
5. Bodily Injury or Property Damage: These claims are excluded and typically covered by General Liability Insurance.

D&O insurance protects the personal assets of directors and officers by covering the costs of legal defense, settlements, or judgments in the event of a claim. This helps accounting firms mitigate financial risks associated with potential legal disputes.

While no firm can eliminate all risks, accounting firms can take steps to reduce the likelihood of claims by ensuring high standards of professional conduct, implementing robust internal controls, conducting regular training for staff, and maintaining clear, documented communication with clients.

Yes, accounting firms with larger client bases or more complex operations may face increased risks of D&O claims due to the larger volume of financial statements, audits, and the diversity of services they provide.