Directors and officers liability insurance is a type of liability insurance catering to directors and officers of an organization, or to the organization(s) itself. It offers a reimbursement in case there are any losses or advancement of defense costs, if the insured faces any loss due to any legal action against alleged unethical or wrongful acts. The coverage includes defense costs resulting from any criminal and regulatory investigations as well as trials. Most of the criminal and civil actions are taken simultaneously against directors and officers. Although, intentional illegal activities, are not generally covered under directors & officers liability plans
It is associated with wider management liability insurance, as it provides coverage for the liabilities of the company or the personal liabilities of the directors and officers of the company.
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**Premium Starting from Rs 1999/Month for a coverage of Rs 1 Cr
D&O insurance safeguards past, present and future directors and officers of profit or non-profit organizations from any damage(s) arising from alleged/actual wrongful activities they may have been involved in. The plan offers security in case of any alleged or actual error, omission, misstatement, breach of duty, or misleading statement. There are some plans which extend the cover to employees as well.
When a Board of Directors is established, directors and officers liability insurance is useful. Generally, investors consider directors and officers liability insurance as a pre-requisite for providing funds to a company.
Directors and officers of corporations are answerable to their shareholders, employees and the general public of the organization. Any wrong decision can lead to a legal hassle. The consequences followed by such allegations can trigger a civil or criminal action against directors and officers. The directors and officers’ liability insurance plans offer cover against a wide array of civil and criminal actions that can be taken against directors and officers.
Here are a few reasons that make directors and officers insurance a necessity.
The plan is formulated, especially, to safeguard the legal claims for wrongful acts such as errors, omissions, misstatements, breach of duty, negligence etc. of directors/officers while on duty. The plan caters to the directors, officers and the organization itself.
Furthermore, the key benefits of directors and officers insurance plan will help you to understand its necessity.
1. Susceptibility to stakeholder claims
2. Authoritarian investigations
3. Irregularities related to accounts
4. Sexual assault, employment violations or discrimination accusations
5. Exposures associated with acquisitions and mergers
6. Requirements related to Corporate Governance
7. Compliance with a range of legal statutes
7. Other stakeholders
1. Illegal personal profits, payments or advantages
2. Claims against bodily injury or property damage
3. Violation of legislations regarding insider trading
4. Penalties, fines or multiple damages
5. Fraudulent act or omission or willful violation of official norms