For the directors and officers of a big firm, it is almost inevitable to avoid the legal problems and thus, protection from a legal trial becomes necessary for such people and this is where the role of Directors and officer’s liability insurance comes into play. It includes policies that cover legal costs and payouts in case of any legal liabilities.
Directors and officer’s liability insurance is an insurance that covers the directors and officers of a company against any claims made while they are serving as the members of the company. It basically covers the claims arising due to poor financial decisions or wrongful practices of the directors of the organization.
Directors and officer’s liability insurance proves to be useful under the following circumstances. Have a look:
All the directors and officers of any organization have public exposure and they are vulnerability to risks regarding their practices and working approach is high. Such risks can sometimes lead to financial and legal liabilities. Directors and officer’s liability insurance takes care of all the cost involved in these processes.
It is a popular myth that Directors and officer’s liability insurance is meant for public domain companies but findings of some recent surveys revealed something otherwise that all public, private and non-profit organizations face legal issues concerning their serving Directors and Officers and thus, it is not necessarily true that D&O liability insurance is only meant for public domain companies only.
The coverage provided by a Directors and officer’s liability insurance is broadly described below. Coverage is provided to the directors and officers and under certain circumstances employees too -
Conclusion
As we mentioned in the first line of this article that lawsuits against organizations are not rare these days around the world. Due to this reason Directors and officer’s liability insurance is crucial for every company having a board committee or an advisory committee contradicting the famous myth is this particular insurance is only meant for the companies that are in public domain.
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