What a captain is to a ship; the directors are to a company. That is the reason why you want to get the best people at the helm of affairs for your organization. Directors and officers steer the company in the rightdirectionthrough their decision making and strategic planning. Their role is of significant importance asthey shoulder great responsibility. 

However, sometimes their actions and decisions may cause harm to shareholders or non-shareholders who may file a lawsuit against them and the company, both. To secure the leaders of your company against such risk, you, as the owner of the company, need to consider buying D&O insurance (Directors and Officers Liability Insurance) for them.

If you want to know how exactly D&O insurance can help, then let us help you understand: 

What is D&O Insurance?

D&O insurance provides financial coverage to directors and officers for the cost of legal defence, even if it is in their individual capacity. It also provides coverage when the company is not able to defend them. D&O insurance provides coverage for the following cases:

1. It covers any damage or loss that the company may incur as a result of actions mistakenly taken by directors and officers in their individual as well as their official capacity under the Memorandum and Articles of Association.
2. It covers legal expenditure related to the prosecution of any officer or director incurred at the time of investigation, enquiry or any other proceedings by an authority. However, the insured will need the written consent of the insurer. 
3. It also covers any expenses incurred by the shareholders of a company in pursuance of a claim made. In such a case, the insurer must be declared legally obliged to payas per the direction of the court.
4. It also offers indemnity benefit to legal representatives or heirs of the director/officer if the insured becomes insolvent.

Such coverage applies to present, former and future members of the board of directors or even an employee performing a managerial role.

What Benefits Does D&O Insurance Provide?

The various benefits provided by D&O insurance are as follows:

• Comprehensive Coverage 

With D&O insurance for your company’s leaders, you can receive coverage against a wide range of litigations, whether filed by customers, vendors, employees, shareholders, or even the general public. You can also enjoy security against litigation that arises due to acts of some other company, where your director is serving as a nominee director. If your company has operations abroad, then D&O insurance will provide coverage for claims arising there too.

• Defence Cost

The D&O insurance will also provide for lawyer’s fees to defend their case in court. Further, through add-on covers, the policy can also reimburse any expenses incurred forinvestigation by authorities, responding to the regulatory notice, hiring a PR consultant for minimizing losses.

• Employee Related Claims

There is also an extension of Employment Practices Liability Insurance (EPLI) through which coverage is provided in case an employee sues the director or officer for acts such as biased termination and sexual harassment. The extension of Entity EPLI provides coverage to the company under such circumstances. 

• Personal Liability Covered

Officers and directors of a company may even be held personally liable for acts related to breach of authority. In such cases, their assets may be confiscated, or they may be arrested. D&O insurance defends such claims and pays for costs related to bail bond expenses and to free up any such assets.

• Civil Fines, Tax Liability and Penalties Covered

If the local law permits, then the D&O insurance policy can also provide for any fines or penalties levied by appellate or statutory authority. In case, the officer or director becomes insolvent and is unable to pay corporate taxes; then the policy may even cover them for the same. However, such coverage needs to be bought as an add-on cover. 

Secure Your Leaders With D&O Insurance

Having D&O insurance has benefits not just for the Directors and Officers but also for the company. When looking for the best D&O insurance, you may look for insurance brokers who can help you find the best one. D&O insurance plans, as provided by reliable insurance brokers like SecureNow, also provide Side A cover in which the insurer will indemnify themselves in case the company is unable to do the same. They have quick turnaround time, and you will also receive strong claim support when buying through such a broker. 

Buy the best D&O insurance today and keep your leaders secure.