Directors and Officers Liability Insurance

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Why do I need a D&O policy?

The directors and officers are key players in the management and administration of any organization. These persons are at the helm of the company. They make executive decisions that impact the growth and profitability of the company.

However, being human, the officers of the company often make mistakes while carrying out their duties. Such mistakes can cause third party losses due to which the company might face a lawsuit. The organization can protect its directors and officers against lawsuits and their financial implications, and this is where a directors and officers (D&O) liability insurance policy comes into the picture.

A D&O insurance policy covers third-party liability faced by the directors and officers due to their mistakes, errors, or negligence, which have caused a financial loss to a third party.

Importance of a D&O insurance policy

Here are some reasons why a D&O liability insurance policy is a must for organisations.

Security for key employees

Humans tend to make mistakes. These cannot be entirely avoided. If your employees constantly have to be fearful and look over their shoulders for repercussions from any possible errors, their productivity would be affected. Additionally, they would be afraid of taking any important managerial decision, simply to avoid any consequent liability.

D&O liability insurance provides financial security to your employees, allowing them to work without apprehensions or hesitation. They now know that in case of any liability, the policy would provide them with coverage against financial loss. Hence, they are motivated to put in their best efforts towards ensuring the organisation’s growth and success.

However, to ensure complete peace of mind, make sure that you choose an insurer who helps you in having a hassle-free claim settlement of your D&O insurance policy. This will only ensure the proper security of your key employees.

Help in attracting new talent

Every company wants to attract and retain good talent for growth. To achieve this, you have to give your employees something besides a good paycheck. A D&O insurance policy promises added financial security. Talented directors and officers watch out for this kind of benefit before joining a new organization. Thus, if your company provides coverage to new employees and ensures the timely settlement of claims through a good insurer, then it is more likely to attract good talent. A D&O insurance policy encourages directors and officers to  join the organisation because they feel safe against possible financial risks, which may arise due to errors committed at the job.

We find that many directors and senior executives now ask for a copy of the D&O insurance before joining and have the insurance reviewed independently. This reinforces the importance of insurance to attract talent.

Provision of the comprehensive scope of coverage

If a director or officer faces a third-party charge there is an implicit expectation that the company will pay defence costs and penalties. This can be a significant financial burden and may require provisioning in the financial statements. With insurance, even the company is financially secure. That is why the insurance should be comprehensive.

A directors and officers’ liability insurance plan provides comprehensive coverage to your employees. Besides covering the financial compensation payable to third parties, the policy also covers the legal costs incurred in defending the company’s directors and officers in case a lawsuit is filed against them. Moreover, there are optional extensions available under D&O liability insurance policies. These extensions help in enhancing the scope of coverage of the policy. Thus, you can avail of an all-inclusive coverage from the policy and protect the financial interests of your valuable employees. You should ask your insurer for this information and also for examples of claims that they have settled.

Garnering goodwill

A company that invests in a D&O insurance policy is considered to be a pro-employee organisation. Such a company usually has a positive work culture with motivated employees. This helps the company gain goodwill in the industry. Such goodwill becomes an intangible asset and helps in boosting the valuation of the company.

Given these benefits, directors’ and officers’ liability insurance policy is a must-have for your organisation whether you are a start-up, an SME, or a large corporate. You should, therefore, invest in a suitable plan for your employees and give them the security that they deserve.

Additional Read: Why should start-ups need a D & O policy?

How SecureNow can help 

Thus, buying the best D&O liability insurance policy is necessary for a company. However, with so many general insurance companies offering a D&O insurance policy, it could be a difficult task to choose the right one. Let us help you make the right choice.

SecureNow can help you in getting the best D&O liability insurance policy for your employees. Visit www.securenow.in or call us at 96966 83999 and share your coverage needs. SecureNow will compile the list of insurance companies with the best plans. Compare the companies and plans and find the best one that matches your needs.