Many big and small factors ultimately determine the success of a company, and amongst many others – being cautious and protecting your business, your employees, and your products against legal actions. One certain way to do that is to get the proper insurance policies. Some policies are specific to certain kinds of businesses, like product liability insurance for instance, and others are quite universal and pretty much essential for almost any company or organisation – like the directors and officers insurance.
Why Would You Need a Directors and Officers Insurance Policy?
For directors and officers of companies and organisations, things are getting more and more complicated when it comes to all of their obligations and responsibilities. These people answer to a lot of different entities or individuals: their companies, their employees, their customers, their clients, the investors, the shareholders, the beneficiaries, and most importantly the law.
And, while depending on the type of the company, as well as the size and other factors, their risks are smaller or bigger, all of these people are liable and prone to legal actions. And regardless of the size of the company or organisation, regardless of the industry or the field etc., they all have one thing in common: they can make a mistake, willingly or unwillingly that can cost them a lot!
There are many types of legal actions that can be taken against directors and officers. They can be sued for improper management, conflicts of interests, wrongful acts, errors in judgment etc. They can also be investigated by governments or regulatory agencies, etc. And the companies or the organisations can not only suffer a lot financially, but these cases can hurt their public image, even if no wrongdoings are found. And all of this is why it’s vital for any business to get a directors liability insurance and protect not only their employees but their entire business as well.
Upper management employees are very important in any business, and they are a huge asset. This is one of the reasons why they should be protected. In turn, this will be good for business in more ways. Aside from protecting the directors and officers and the business itself, directors and officers liability insurance is also a great way to attract good management members and keep them.
What Does the Directors and Officers Insurance Policy Cover?
D&O insurance provides protection for the board of directors or any individual who serves as a director or an officer in a company or an organisation. With this insurance policy, your upper management is protected from personal losses, and the business or the organisation itself can be indemnified for any costs, like legal fees, sustained during the lawsuits.
Payable directly to the directors and officers, directors liability insurance policies typically run for 12 months. It can cover legal costs, damages, public relations, bail bond expenses, settlements, defence costs, persecution costs, etc. However criminal charges may be excluded from the D&O policy. Some companies also get a policy that includes former occupants of those positions, as a precaution. That’s because an individual that has previously worked as a director or an officer in a company or an organisation can become liable even after leaving the position.
So, in other words, the officers and directors insurance is the best, and probably the only way to be prepared for most scenarios in which they’d be liable. A good directors liability policy will ensure an immediate response which can be especially important in many cases and vital for the outcome of the claim.
Why Should You Find a Professional Insurance Broker?
Different companies or organisations have different responsibilities toward different entities or individuals. All of this can get quite complicated, which is why when you determine that you need to purchase a directors insurance policy, you should find an expert to help you make the right choice, as well as understand how exactly the policy works. A professional insurance broker studies the particular case, and they can make predictions about any potential events that could cause a claim, and offer appropriate coverages. They then advise the client on everything they’ve learned and about the policy, as well as which one is best suitable for their specific situation and needs.
When you are trying to obtain the D&O liability insurance policy the most important thing is to understand exactly what is covered by the policy you want to purchase. Furthermore, you need to learn about all the rules and responsibilities you have so that you will be able to claim coverage or compensation. Regardless of the insurance company, every policy will have some type of simple rules, which can determine if the insurer will reduce or negate the payment. Very often, if a claim is made against you, you should immediately contact the insurance provider, because otherwise, they might refuse your claim.