What is Directors’ and Officers’ (D&O) Liability Insurance?
Directors' and Officers' Liability Insurance is a policy that offers coverage against losses if sued as a company or for their jobs as directors or officers of a business. The policy covers legal fees and costs that the organization incurs due to such a suit.
The policy provides an extra level of coverage against all kinds of unpredictable and potentially large liability claims, as well as cover for some losses due to a lawsuit.
Why do you need a Directors' & Officers' Liability Insurance?
A Directors' & Officers' Liability Insurance policy is needed to
Here are the reasons why you will really need the policy:
- It protects you and your business against vulnerabilities.
- In case of discrimination, harassment allegations or any other employment practice violations the business will not face losses.
- Cost of regulatory investigations, defending and settling claims, as well as paying any compensation will be covered.
- You can ensure that you will be complying with corporate governance requirements and other legal statutes.
- It protects against the risks and financial exposures that come with managing a company.
What will a Directors' & Officers' Liability Insurance policy Cover?
When you get a Directors' & Officers' Liability Insurance, your business will be protected in case of....
What’s not Covered?
Since we at Digit believe in transparency, here are some cases where you won’t be covered.
What Factors Impact the Premium of a Directors' & Officers' Liability Insurance policy?
The payable premium for a Directors' & Officers' Liability Insurance policy depends on numerous factors like:
- Nature and type of business and the industry
- Size and age of the company
- Total number of employees
- Number of managers, directors, and officers working in the company
- Number of shareholders
- Number of assets in the company
- Financial stability
- Liability limit you opt for
- Trading patterns
- Estimated revenue and/or profit
- Details of past claims made
Which Businesses need a Directors' & Officers' Liability Insurance?
A D&O Liability insurance policy can be used if you feel that your business needs protection from internal or external claims against managers, directors and officers. The policy comes in handy against potentially large liability claims. Listed below are the kind of companies which can avail themselves of Directors’ & Officers’ insurance policy:
How to choose the right Directors' & Officers' Liability Insurance?
Common Directors' & Officers' (D&O) Liability Insurance Terms Simplified for You
- Director - A person placed in a managerial position of the organization that also includes other members of the management board.
- Bodily Injury - The term refers to any physical injury, sickness or disease that results in death, humiliation, mental anguish, mental injury, or shock.
- Employment Wrongful Act - Any wrongful act committed by the insured in connection with the employment like wrongful dismissal, denial of natural justice, breach of employment contract, sexual harassment etc.
- Third Party - This refers to any person or entity which is besides the two primarily involved parties in a situation, especially in the case of a dispute.
- Limit of Liability - Limit of liability is the maximum amount for which an insurance company may be liable under a policy.
- Deductible - The amount of money which you are responsible for paying towards an insured loss.
- Property Damage - It refers to physical injury to tangible property that results in loss of use as well as loss of use of tangible property that has not been physically damaged.
- Inquiry - Investigation conducted in relation to activities of the company can be referred to as inquiry.
- Pollutant - Any irritant or contaminant in an insurance policy whether in solid, liquid or gaseous form is known as a pollutant.