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Why Do You Need Directors & Officers Insurance?

Posted on 29 August, 2022

Directors and Officers Liability Insurance (D & O Policy) is insurance that protects directors and officers of a company if they are sued for wrongful decisions or actions while in their corporate roles.

A Directors and Officers Insurance plan can help cover the costs of legal defence and any damages awarded in a lawsuit. It is crucial to have this coverage in place to help protect the personal assets of directors and officers from lawsuits alleging wrongful acts.

Legally speaking, Directors and Officers are accountable to various stakeholders like creditors, competitors, shareholders, customers, employees, and Government bodies. If any of them suspects that you breach your duties, it is within their rights to sue you.

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Need of Directors & Officers Insurance

They may make accusations of wrongful acts against the Directors, Officers, or employees. These personnel may need to incur defence expenses, damages, compensation and other associated costs.

It can severely affect the growth and performance of the company. The Directors and Officers Liability Insurance protects you against such losses, expenses and claims. It would help if you had the D&O policy to cover the costs for defending and compensating your stakeholders during the following situations:

  • The business cannot pay for the stakeholders’ losses due to a lack of funds. Or refuses to pay because it believes it is not in the wrong

  • The personnel under scrutiny want to protect themselves against financial demands and allegations

  • If any Employment practice liability (EPL) arises from allegations and lawsuits related to:

  • Employment process

  • Defamation

  • Caste discrimination

  • Gender discrimination

  • Sexual harassment

  • Breach of occupational health

  • Breach of workplace safety laws

  • Death at workplace

  • Suppose there is physical damage, be it of any kind, for which an individual or an entity sues the high ranking personnel. In that case, the Directors and Officers Insurance cover the defence costs of the insured company.

  • Suppose there is a civil fine or penalty. In that case, the D&O policy will cover you as long as those charges are legally insurable.

  • If you have a small or a new business, you are more prone to stumble upon unwarranted lawsuits and claims. You can purchase Directors and Officers Liability Insurance to protect your company and yourself against such financial turmoil.

Choosing The Best D&O Insurer

When you start comparing insurance companies to purchase a Directors and Officers Liability Insurance plan, it would be beneficial if you search for the following qualities:

  • The insurer’s Expertise in minimising and mitigating risks

  • The insurer’s capabilities of advising you on potential risks and sharing with you their safety measures

  • The claim settlement process is plain and simple

To Conclude

As a business owner, you have a lot on your plate. You’re responsible for making decisions that affect the company’s bottom line, and you’re also responsible for the well-being of your employees. That’s a lot of pressure!

One way to help relieve some of that pressure is investing in Directors and Officers Liability Insurance. It can offer financial protection if you’re ever sued for wrongful actions while being a director or officer of the company.

ICICI Lombard is one of the leading insurance companies in India that offers Directors and Officers Liability Insurance. It would help if you discussed the available options with an insurance agent to find a policy that meets your specific needs.

  • Directors and Officers Liability
  • Product Code: 4025
  • Product UIN: IRDAN115RP0001V02200607

Help us know you better!

This contains only an indication of the cover offered. For complete details on risk factors, terms, conditions, coverages and exclusions, please read the sales brochure carefully before concluding a sale.ICICI trade logo displayed above belongs to ICICI Bank and is used by ICICI Lombard GIC Ltd. under license and Lombard logo belongs to ICICI Lombard GIC Ltd. ICICI Lombard General Insurance Company Limited, ICICI Lombard House, 414, Veer Savarkar Marg, Prabhadevi, Mumbai – 400025. . IRDA Reg.No.115. Toll Free 1800 2666. Fax No – 022 61961323. CIN (L67200MH2000PLC129408). customersupport@iciclombard.com. www.icicilombard.com. (Workman Compensation, 4010 , IRDAN115P0010V01200607)