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.
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:
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
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.