Which claims are settled by D&O Policy?
To cover the third-party liability claims that can be brought on directors and officers of an organization due to mistakes committed while performing managerial duties, directors and officers’ insurance policy is available. The policy provides a wide scope of coverage against third-party claims, including coverage for lawsuits that your organization might suffer. The policy is designed to cover directors and other key personnel of the company that makes important executive decisions.
When buying a D & O insurance policy you need to understand the scope of coverage of the policy. This would allow you to understand which claims would be settled by the directors and officers insurance policy.
Claims settled by D&O policy are:
- Claims due to misrepresentation
The directors or officers of the company may show incorrect information in the financial statements of the company or hide important information about the company when entering into a contract with other parties. Moreover, they might lie about important facts of the company to third parties due to which third parties might suffer a financial loss. Such cases are examples of misrepresentation for which the organization might face a lawsuit. Such misrepresentation-related claims are covered by the D & O insurance policy.
- Claims due to violation of laws or statutes
The directors are expected to conduct their duties within regulatory frameworks established by the Government and regulatory bodies. If any law or rule is violated, it might give rise to directors and officers claims brought against the organisation by the Government or regulatory body itself.
- Claims due to misleading promotions
If the company engages in promotions or advertisement of its goods or services which are misleading in nature, the company might suffer a lawsuit. If the directors are involved in such misleading promotions, they would be held liable and there might be a claim.
- Claims due to breach of duty
Third parties might file a liability claim against directors because they did not conduct their duties as required. In such cases, there would be a breach of duty claim.
- Claims from stakeholders
The stakeholders of the company might file a lawsuit against its directors for the bad performance of the organization leading to devaluation of its stock.
- Claims from employees
Employee-related director’s and officers’ claims might also arise due to misconduct, sexual harassment, discrimination, etc. by the directors.
In the afore-mentioned instances, a directors and officers insurance policy would cover the financial liability suffered by directors and officers. The D & O insurance policy would cover the settlements paid by the organization on behalf of its directors or by the directors themselves. It would also cover the litigation costs associated with such claims.
Additional Read: How to file a claim under a D & O policy?
For your directors and officers’ claims, you can contact SecureNow and get assistance in claim filing. SecureNow has a claim advisory that helps in the quick settlement of D & O claims.
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