If you’re running your own business organisation, you’ll know how critical decision-making is towards helping to make or break your company’s fortunes. For this you rely on your top management and place your trust in them. However, you need to ensure that the directors and officers do not harbour any apprehensions in taking bold and opportunistic decisions, because of fear or their insecurity. These insecurities may arise because due to their key directors and officers are often exposed to the risk of facing litigation and legal charges.
That is why a critical role of a business owner is to make the top-level decision-makers feel secure in their work. This will make them feel empowered and free to take decisive steps in directing the company’s progress. Whether you’re a small business or a big corporation, one of the best things that you can do to make your top-level executives feel safe is to buy a Directors & Officers (D&O) liability insurance in their name.
Not sure what D&O insurance is, and how it works? Let us guide you about the various facets of this insurance policy.
What is D&O Insurance?
Directors and officers involved in high-level decisions of a company carry significant responsibility and also, significant risks. Often investors, customers or even the firm itself may accuse the directors of misconduct. Such accusations may lead to lengthy and expensive lawsuits and even end up in financial settlements.
D&O Insurance, i.e. Directors and Officers liability insurance covers the risks that directors and officers carry while discharging their duties as representatives of the company, and this insurance can provide for the financial cost of the litigation or settlement of the suite.
In case your company pays for the loss on the concerned officer or director’s behalf, then the insurer will reimburse your company, instead of that individual. This condition applies to any additional covers taken along with the standard plan.
Benefits of D&O Insurance for Directors and Officers
- Director’s Personal Liability
As per the Companies Act 2013, if a director or officer is held personally liable for acts of breach of authority, then there are chances of their assets getting confiscated or them even being arrested. In the absence of such an insurance cover, directors and officers may feel fearful of the consequences of their decisions all the time. However, if as an organisation, you offer them such a cover, then financial support can be available from the insurer when contingencies arise.
Having this policy will help them defend themselves against such claims as the insurer will pay for costs associated with freeing up assets and meeting bail expenses. A good D&O insurance policy will also pay the individual for any lawyers cost, hiring a PR consultant or for expenses incurred to respond to a regulatory authority.
- Side A Cover
At such times when the law prohibits your company from indemnifying a director or officer, or if your company becomes insolvent, Side A cover will cover them for the same. Under this cover, the concerned director or officer can seek indemnification directly from the insurer without referring to the company.
- Tax Liability, Civil Fines and Penalties
The D&O liability insurance will also cover the decision-makers of your company for any penalties that may be levied on them by a court of law or any statutory body, along with covering any civil fines. To offer more security to your top management you can even buy customised add-ons with your D&O policy.
Benefits of D&O Insurance for Your Company
- Increased Loyalty of Officers and Directors
The benefits provided to Directors and Officers under this policy will increase their sense of security. This will ensure that they take decisions in the best interest of the company, without worrying too much about how this might expose them to unanticipated risks. In the long run, this will have a positive effect on the loyalty of executives for the organisation.
- Achievement of Goals
When directors and officers feel valued in the company, because of this security benefit offered, they will feel more motivated to work and contribute more. This will benefit the organisation in terms of achieving various goals and objectives. All this will speed up your company’s growth.
Secure Your Decision Makers to Empower Them
Securing your decision-makers is a step that will make them feel positive about being a part of your company. Moreover, their sense of comfort and well being will percolate down into the lower levels also. Therefore, their satisfaction is necessary to ensure that the organisation advances and grows without holding back.
As the owner of your company, its really important to extend all possible security to your leaders to provide them with a sense of protection against possible risks. Reputed insurance brokers like SecureNow bring together an array of benefits offered by different insurers and can help you choose the most suitable plan for your company and its leaders.
You can compare and select the best D&O insurance plan using online calculators that can also provide tentative quotes online for the cover from various insurers.
Wait no more, empower your leaders through this step to secure them. This will fill them with a sense of security and pride to be associated with your company and help them stretch to achieve ever higher goals!