A directors’ and officers’ (D&O) liability insurance policy takes care of the financial liabilities of an organization’s senior management. Such liabilities arise when mistakes or wrong decisions occur. These, in turn, could result in financial losses for third parties. If these individuals then make a legal claim to recover their losses, a D&O policy covers the directors and officers. So how to negotiate the best price for a D&O insurance policy?
The D&O policy coverage is quite comprehensive. It covers settlements payable to third parties as well as legal and defense costs that an organization incurs. In fact, as an organization, you can select the sum insured.
Then, depending on the coverage selected and other factors, the insurer determines the D&O policy premium. However, you can negotiate a reduction in the price of the D&O insurance policy. Here are some ways in which to do this.
Choose the right coverage
It is important for you to choose the right D&O policy coverage. If coverage is insufficient, you will incur considerable out-of-pocket expenses. On the other hand, if the coverage is too high, there would be unnecessary premium payments. Thus, you should assess coverage needs and make the right choice. This would also allow you to negotiate the premium amount.
Deductible
A high deductible will reduce your premium but you may have a large out-of-pocket in any situation. Too small a deductible will increase your premium. For a policy with a sum assured of Rs 2 to 5 crore, a deductible of Rs 1 lakh is typically appropriate.
Pick extensions wisely
Policy extensions help in enhancing the scope of coverage but they come at an additional cost. Thus, when selecting extensions, you should be careful. You should understand the scope of available extensions and choose only those that you would need. If the insurance company offers additional extensions, you can negotiate and drive down the premium.
An expensive extension is the Entity EPLI. The reason this is expensive is that maximum claims arise in this area. If you do not expect employment-related claims or have that insured separately then drop the entity EPLI extension. However, this should be a considered decision.
Look for discounts
You can look for different types of premium discounts that insurance companies offer. You can also negotiate with the insurer for discounts on online premium payments or for opting for comprehensive coverage. If you bargain for premium discounts, you can get the best price for the policy. An experienced broker like SecureNow is immensely valuable in such negotiations.
Select geographical coverage correctly
If your clients are all India-based, then you do not need international cover. Similarly, if you can exclude the US from coverage, it will reduce prices because liability costs pertaining to the US are the highest.
Compare policies
Many insurance companies offer D&O policies. To get the best price, compare available plans. By doing so, you can find plans that offer the best coverage benefits and have the lowest premiums. Moreover, when you have quotes from multiple insurers, you can negotiate the premium easy to get the best price. SecureNow’s online platform allows organizations to compare available D&O liability insurance policies. You can provide your coverage requirements and SecureNow can give you deeply researched quotes for some of the best plans across insurers.
