Why Your Business Needs D&O Insurance
Companies must take responsibility for employees at all levels of employment. Among the most important to the business is its c-suite and board of directors. They are critical players, but also high liabilities to your company’s success. To give them the liability insurance they need to do their jobs, you will need to buy directors & officers (D&O) insurance.
D&O insurance is important to both company leaders and the company. It gives them more reassurance that they have the support they need to succeed, but it also protects the company from the ramifications of the company principal’s mistakes. Here’s how it works.
C-level executives, boards of directors and other company leaders are the public faces of a business. They also are those whose primary tasks are to bring in new business and guide the company’s operations. Still, they are not immune to mistakes, and if they cause problems for others, then the effects could be far-reaching, both internally and externally.
On one hand, your company might have general liability and professional liability insurance to safeguard itself against these risks. However, these policies do not protect employees on an individual level.
When it comes to company principals, they need a personalized liability insurance benefit, which is where D&O insurance can step in. In liability lawsuits, a company director might be named specifically. Therefore, not only their place within the business, but also their personal assets could be under threat. Their family, too, could face ramifications, even when a mistake made by the director was unintentional.
The benefit of D&O insurance is that it helps protect the director while they address these mistakes. They won’t have to worry about losing their home or facing financial instability even if they must make restitution to those affected by their negligence.
Under a D&O plan, company principals have very clear pathways on how to handle liabilities.
Plus, the policies can pay under a variety of circumstances, including following:
Given that these are all sensitive matters which directors handle every day, D&O insurance can give them confidence to do their jobs. It is not permission to misbehave, nor is it going to cover them against illegal actions. However, it does represent that they have support behind their decisions. Indeed, many company directors want to know they have this coverage when interviewing with new companies. Therefore, by having a D&O plan, you’ll be able to always attract top-tier talent.