It is becoming increasingly common for organizations to have insurance for officers and company directors liability, but some decision-makers may still question whether they need this type of insurance. Realistically, Directors & Officers insurance is virtually essential for any organization with a board of directors. Companies that fall into the two categories below can especially benefit form taking out a Directors & Officers policy.
Companies With Limited Financial Resources
It is not unlikely that a company will face claims of misconduct on the part of directors and officers someday, considering all of the claims that could be made. People from employees to stockholders can make claims pertaining to mistakes, omissions, negligence, or breaches of duty. Such claims can place a significant financial burden on those accused and the entire organization. Company directors liability policies are essential for companies lacking the finances to handle these claims.
Companies With Other Liability Policies
Some companies have different liability policies in place, such as professional liability insurance or errors & omissions insurance, and it can be easy to believe these policies provide adequate coverage. However, these policies protect against negligence or failures in the performance of professional services, so the actions of directors and officers may not be covered. The only way for organizations with directors and officers to fully mitigate the risk is through a Directors & Officers policy.
Protecting the Organization’s Interests
Even organizations that aren’t in high-value or risk-filled industries can benefit from Directors & Officers insurance. With the pressure and transparency most organizations operate under today, protecting the actions of directors and officers through a tailored liability policy represents a smart investment.