You wish to be a part of the top-level management of an organization so that you can participate in decision making and strategic planning. While it is a matter of pride to be a director or an officer, it also comes with a great sense of responsibility. In your role and capacity, you affect many internal and external stakeholders. That is why every step you take has far-reaching implications. From deciding on mergers and acquisitions to setting new goals, you and your fellow top-level managers are like the captains of a ship, steering the company in specific directions.
It is precisely because of this that you’re also exposed to the risks of facing legal action as a result of alleged wrongful acts. In such a situation, not only does your reputation get blotted, but you can also face massive financial charges. When it comes to securing your safety and stature, you can try to be careful. However, to keep yourself secured financially, you can purchase D&O insurance policy that indemnifies you against the possibility of financial losses.
So, if you too wish to secure yourself from possible liabilities and risks that may arise, in your role as a director or an officer, then let’s tell you more about D&O insurance policy.
Directors Officers Liability Insurance
What is D&O Insurance?
D&O Insurance, i.e. Directors and Officers liability insurance covers you against any loss incurred by you or by anyone else on your behalf, based on any claim made against you. However, this claim must be made during the policy period or discovery period, for any wrongful act that must be committed during the insurance period only.
In case if the company which you belong to, pays for the loss on your behalf, then the insurer will reimburse the company, instead of you. This condition applies to any additional covers taken by you also.
Benefits of D&O Insurance Policy
- Director’s Personal Liability
One of the primary benefits provided under this policy is that as per the Companies Act 2013, if you’re held personally liable for acts of breach of authority, then you shall be covered by the insurer. In such cases, there are chances of your assets getting confiscated or that of you getting arrested.
Having this policy will help you defend against such claims as the insurer may pay you for costs associated with freeing up your assets or that related to bail bond expenses. Reputable insurance brokers such as SecureNow pay for any lawyers cost, hiring a PR consultant or costs incurred to respond to a regulatory authority.
- Side A Cover
A lot of times, your company may indemnify you in case of a claim made against you. However, it may be unable to do so when it either becomes insolvent or when it is prohibited by law to do so. At such times, the Side A cover specifically helps you by indemnifying you. Typically, this cover has nil excess.
Also, under this cover, you as a director or officer, can seek indemnification directly from the insurer without referring to the company.
- Tax Liability, Civil Fines and Penalties
In case the firm you’re a part of becomes insolvent, and you’re personally held liable for unpaid corporate taxes, then the policy will cover you for this liability too.
The D&O liability insurance also covers penalties that may be levied by a court of law or any other statutory authority along with civil fines. To stay secured against such liabilities, you can buy these covers as customised add-ons when buying your D&O policy.
- Additional Covers
If you wish to enhance your security coverage beyond the basic coverage offered, then you can even purchase other covers. Several types of add on covers are offered by insurers which includes Public Relations covers which reimburse you for PR services required by you; Retirement cover, and Employment Practices Cover. So, you can decide to buy one depending on your individual needs.
Exclusions from the Policy
The D&O insurance policy generally excludes claims that arise from dishonest and fraudulent acts committed by you. This means that if you indulge in willful violation of regulation or illegal personal profit-making, taking monetary advantage, then the policy shall not cover you for the same.
Also, claims reported under a prior insurance policy are not covered under this policy.
Stay Secured With D&O insurance
Now that you know how D&O insurance can cover you against different kind of liabilities and risks that you’re exposed to, you shouldn’t let yourself remain vulnerable. Act prudently and buy D&O insurance at the earliest to stay secure. Reputable insurance aggregators such as SecureNow offer comprehensive coverage against litigations that may arise from customers, vendors, shareholders general public or even employees. Moreover, such plans also have worldwide coverage and hence will give you a full sense of security.
So, stay insured and carry out your roles and responsibilities with dignity and pride.
