Organizations need employees in top managerial positions to make executive decisions for the benefit of the company. These decisions help the company grow and become profitable and so organizations try and recruit the best talent. Employees, however senior and experienced they might be, might, however, make mistakes during the course of their employment. They might make a wrong decision or neglect an important task. Such mistakes might cause a financial loss to other parties like other employees, vendors, stakeholders, etc. If there is a lawsuit due to such a mistake, the financial implications are considerable. A directors and officers liability insurance policy come to the rescue of both the directors and officers of the company as well as to the company itself. So, How is the premium paid in D&O Policy?
The D&O liability insurance policy provides coverage against third-party liabilities that the organization and/or its directors might face due to errors and omissions. The policy covers the financial settlement payable to third parties as well as any legal costs incurred. The D & O insurance policy, therefore, provides a wide scope of coverage to the organization and its employees.
Premium of D&O insurance Policy
The premium of a directors and officers liability insurance policy is calculated taking into consideration a lot of factors. These factors include the following –
- The nature of the industry the organization engage in
- The type of risk faced
- The number of years for which the organization has been in existence
- The size of the organization
- Number of employees to cover
- The sum insured selected
- The policy extensions selected
Moreover, the premium is negotiable to an extent and that can negotiate between the insurance company and the organization. After calculating the final premium amount, there are different ways in which the organization can pay for the plan. Let’s have a look at what these ways are –
Modes of premium payment of D&O liability insurance Policy
Cash payment
The organization can pay the premium in cash for the D&O liability insurance policy. However, cash premiums are not accepted beyond a certain amount and if the premium is above the specified limit, cash payments might become a problem.
Cheque or draft payment
Organizations can pay the premium through cheque or demand draft drawn on their bank account. The cheque or draft must draw in favor of the insurance company and the policy number or should mention proposal number at the back of the instrument for easier tracking of the payment.
NEFT, RTGS, or IMPS
If the organization has an active net banking account, it can pay the premium online through RTGS or NEFT facilities offered by banks. Almost all banks offer these facilities and even clears the payment quickly. In fact, in the case of IMPS transactions, the payment is instantaneous.
Credit or debit cards
If the organization has a credit or debit card in their name, they can make the premium payment using the cards too.
Digital payment modes
Nowadays, premium of D&O liability insurance policy can also be paid through mobile wallets and UPI platforms. These payments are also instantaneous in nature.
After paying the premium, you can also place a Standing Instruction on your bank account for payment of renewal premiums as and when they are due. This would ensure that you can avail yourself of uninterrupted coverage.
Additional Read: Who is the right insurer to buy a D&O policy?
About The Author
Rajesh
MBA Finance
With a wealth of expertise in the insurance realm, Rajesh is a distinguished writer specializing in articles focusing on directors and officers insurance for SecureNow. Boasting 9 years of experience in the industry, he profoundly understands the complexities surrounding directors and officers liability coverage. Their articles delve into the intricacies of D&O insurance, providing readers with invaluable insights into risk mitigation strategies and policy considerations. Renowned for their comprehensive knowledge and attention to detail, Rajesh is dedicated to delivering informative and engaging content that empowers individuals and businesses to navigate the complexities of insurance with confidence.
