Should You Be Thinking about Purchasing D&O Liability Insurance? Absolutely!
Directors and Officers Liability Insurance (D&O) offers financial protection, for your company’s directors and officers, from lawsuits regarding the performance of company-related duties by directors and/or officers.
Because a company faces inherent risk exposure merely by having directors and officers (D&Os) --- that is to say the potential for claims and suits against D&Os exists merely because your company has D&Os --- it would make sense to have D&O insurance. Having this insurance, which would typically cover claims rooted in allegations regarding the performance of director and/or officer duties, would help with the costs related to resolving claims covered under the D&O Liability Insurance policy.
Consider the tremendous & potentially crippling costs of a lawsuit against your company without D&O Insurance:
- Conflicts of interest may be inevitable
- Some shareholders may be working against the interest of the company for personal gain.
- High stress environments and expansion of corporate duties may lead to greater chances for error for D&O’s.
- Corporations may not be able to recover from adverse claims, settlements, and judgments.
- Indemnifications are not always viable.
- D&O’s often make business maneuvers that have immediate impacts on the operations and finances of the business.
- D&O coverage is quite typically a prerequisite for highly-qualified executive candidates.
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Not Necessarily a Matter of Innocence
Even if you think a legal claim made against your director(s) and/or officer(s) have no merit, it can still lead to litigation --- and then it becomes necessary to hire legal counsel. Court fees can be a costly. Plus, if your company does not prevail in court, your company may have a hefty sum to pay the plaintiff.
And, even if your company and the plaintiff reach a settlement, the settlement amount can be a staggering amount.
Generally speaking, a company is likely to be subject to numerous D&O-related claims during the life of the company.
In many instances, D&O coverage will be required by potential directors and officers who want to serve --- but don’t want to risk their personal assets when acting in the interest of the company.
Others who may want to see D&O coverage are your company’s potential investors. Having an active D&O liability policy is viewed as being prudent and responsible.
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