A D&O insurance policy covers the board of directors as well as key managerial personnel i.e. the officers of a business organization. These key personnel take important executive and managerial decisions for the firm.
If they make any wrong decision or overlook an important aspect of management, they might unknowingly cause a financial loss to a third party like stakeholders, other employees, contractors, etc. If such a third party makes a claim for the director’s or officer’s actions, the organization and the concerned directors and officers face a third-party liability. This liability might result in a hefty settlement and/or even incur considerable legal costs.
To protect the directors and officers and the company against such financial losses, a D&O insurance cover proves to be beneficial. This policy covers the financial liabilities suffered in case of third-party settlements or lawsuits. The policy also covers the legal costs thereby providing all-around coverage to the organization and its directors.
Customize D&O insurance policy
The D&O liability policy allows you the possibility of customization. You can customize the various features of the policy in the following ways –
The coverage benefits of D&O insurance policy
The D&O insurance coverage is available as both inbuilt and optional benefits. Inbuilt coverage benefits include Sides A, B, and C. On the other hand, there exist policy extensions, which can be added under the optional coverage section. Thus, depending on the coverage need of your organization and the insured employees, you can customize the directors’ and officers’ liability insurance policies. You can choose the relevant policy extensions at an additional premium outgo and tailor-make the coverage as per your specific requirements. One example of an extension is to cover retired directors several years after they have left the company. Or, you may choose the earmark as a small proportion of the sum assured. This could be an additional sum assured meant only for the board members.
Territorial customization
This is particularly relevant for companies that have businesses in different countries and regions. While a standard D&O insurance policy might allow coverage only within the territorial boundaries of India, you can opt for international coverage too. You can customize the scope of coverage of the policy by choosing the countries or regions where your business operates. By extending the coverage internationally, you can ensure complete coverage under the D&O policy. Typically, extensions to the US are the most expensive because the level of litigation there is high.
Additional Read: Why should start-ups need a D & O policy?
Customization of duration
The directors’ and officers’ liability insurance policy is usually offered for one year after which you can renew it for continued coverage. However, many insurance companies allow long-term coverage options too, wherein you can avail of coverage over a long period. So, you can talk to the insurance company and opt for annual or multi-year coverage duration depending on your needs.
Addition of entity EPLI coverage
The Employment Practices Liability Insurance coverage, called EPLI short, covers the liabilities suffered by the company from the employees of the company. Generally, if there is an employment practice-related issue then in addition to officers, the company will also be named in the case. Such claims of employment-related malpractices on the company are usually excluded from D&O policy coverage. However, if you need entity EPLI coverage, you can opt for the coverage additionally with an extra premium.
Thus, directors’ and officers’ liability insurance is a dynamic insurance cover that can be customized depending on the needs of the organization. You should understand the scope of the policy and customize it accordingly. This way the policy will perfectly fit the insurance needs of your organization.
Role of SecureNow
SecureNow helps you to get your directors’ and officers’ policies customized easily. SecureNow partners with multiple insurance companies and enables you to compare the D&O plans they offer. You can also negotiate with an insurance company through SecureNow to customize your policy.
