There are many aspects that make a company successful, from the strategic location, the equipment, to the investments, however even if you start off as good you expected or better, you still can’t know when or how a certain risk might arise which is where insurance steps in.
Regardless how big the company is, business owners usually make the mistake of overlooking the importance of insurance, particularly those whose companies have few or no shareholders. Truth be told, any company needs D&O liability insurance, since there are considerable litigation risks to being the company’s director, manager, partner, and trustee, and unless you want to learn it the hard way, you better prepare to get the insurance as soon as possible.
The responsibilities carried by directors and officers are great, such as those towards interested parties (e.g. suppliers, vendors, customers), investors, and shareholders, and at any time there can be a certain risk involved either because of suspicion of mismanagement by the other party, or breeching industry regulations, for example.
You have to agree lawsuits are quite common nowadays, and they don’t come cheap. The fines or penalties can range from mild to severe depending on what the case is and the parties involved, and even result in imprisonment, and the D&O liability insurance can provide the ideal cover.
Whether it’s damages, judgments or settlements, extradition or defence costs, prosecution and investigation costs, pecuniary and court attendance costs, and public relations expenses, you can be sure insurance has your back.
It’s important to find the insurance company that has years of experience in the field and can guide you through it, give you the right professional advice and tailor the insurance for your company’s needs.
The latest in the directors and officers insurance is modular management liability policies, one coverage as a combination of more liabilities, essential in case the claim refers to several liabilities which comes in handy especially for small companies.
However, since a single coverage results in a single limit, it may not be so advantageous for the bigger enterprises, so they make better use of separate coverages. Despite what it may seem, private companies get a broader coverage even with a lower cost, as opposed to the public companies that get D&O insurance limited to security claims.
The advice you should take is to get this insurance cover, and not fall in the trap of believing general liability provides the same protection D&O does. If you want to avoid the risks, get the trust of investors, and partners, and most importantly directors and officers, this insurance is a must.