Why your privately held business needs Directors & Officers Insurance

by Tom Kelly, Cincinnati Insurance Company

Every corporation relies on the guidance of its board of directors for success. Although lawsuits against larger, publicly traded companies receive the lion’s share of media attention, privately held corporations are also vulnerable to lawsuits by competitors, government agencies, creditors and employees. You can protect your hard-earned success by purchasing directors and officers insurance (D&O) coverage for your company.

Having directors and officers insurance coverage in place can help you attract the talent you need for your board. Directors or officers of privately held companies who do not insist that the company purchase D&O insurance are putting themselves, their spouses and their estates at financial risk. D&O insurance minimizes risk to their personal assets.
Not having D&O coverage can have a serious impact on a company’s viability. Even a financially sound business may have insufficient funds to defend officers and directors in the event of a lawsuit. A D&O policy will take care of defense costs and settlement, even if t
he company ends up in bankruptcy.
States impose statutory duties on corporate directors. D&O coverage protects the company and its directors from claims arising from alleged or actual failure to uphold those duties. Directors are under legal obligation to govern their corporation and carry out their responsibilities of office:

• in good faith
• in the best interest of the corporation
• with the care that an ordinary prudent person in a like position would exercise under similar circumstances

Similar duties are imposed on officers of a corporation who may or may not serve on the board. Both directors and officers share the duty to:

• grow the company by prudently managing the affairs of the business
• exercise due diligence that is standard for operating the business
• maintain loyalty to the corporation to avoid conflicts of interest
• obey the corporate charter and state corporate statutes

Policy limits and other factors can vary. Your legal advisers and local independent insurance agent can help you determine how much coverage you need. Premiums are based on the coverage limit requested and other factors such as type of business, financial strength, claims history and deductibles.
Additional coverages, such as employment practices liability, fiduciary liability and cyber liability insurance, may also be available to eligible companies for an additional premium.

To Shovel or Not to Shovel? Here's the Law in Ohio

As far as Ohio law goes, homeowners don’t have a legal obligation to shovel sidewalks due to a natural accumulation of snow and ice, but this doesn’t mean you shouldn’t at least try to maintain them.
In December 1993 the Ohio Supreme Court upheld this law when a guest attempted to sue a homeowner in Franklin County for a slip and fall outside of the homeowner’s house.
In the case Brinkman v. Ross, the court ruled that you are walking at your own risk when Mother Nature calls. The case stemmed from a visit by the Brinkman’s to the home of the Ross’ in February 1989. Ms. Brinkman slipped outside the Ross home breaking her ankle. She sued her hosts in Franklin County Court of Common Pleas. The court threw out the complaint, indicating that it had long been established that Ohio homeowners are not obligated to remove natural accumulations of snow and ice.
The decision was reversed in the court of appeals, saying that if a homeowner knows of a hazardous condition and invites guests to visit, there is an obligation to at least warn them. The case then went to the Ohio Supreme Court where the judgment was overturned.
It’s up to your guests and other pedestrians to assume that due to the nature of Ohio winters, there’s always a risk of a slip or fall due to the natural accumulation of ice and snow.

Local snow removal ordinances
Local municipalities may invoke snow removal ordinances. If your city or township has an ordinance that requires residents to keep walkways free of snow and ice, then you have a responsibility to maintain your sidewalks. Some Ohio cities with snow removal ordinances levy fines for not removing snow in a timely manner while others issue warnings.
However, a local ordinance does not automatically implicate a homeowner if someone slips and falls on their uncleared property.

Examples of local snow removal ordinances/requirements
Below are links to information and/or snow removal ordinances for several Ohio cities and communities. The Ohio Insurance Institute suggests checking with your local municipality on any snow removal policies or requirements. Many provide this information online. Use the key word search “snow removal ordinance” along with your city or local municipality’s name.

•  Cincinnati
•  Fairfield
•  Centerville
•  Columbus