With today's emphasis on corporate transparency and accountability, an organization's directors and officers face a countless number of exposures. Regardless of your company's size or mission, the legal costs associated with a lawsuit can be crippling for both the organization and your directors and officers.
Many wrongly assume that directors and officers (D&O) insurance is only necessary for publicly traded companies. However, privately held organizations can just as easily fall victim to lawsuits that can impact the company, its officers and board, making D&O insurance a must. Specifically, D&O insurance can provide the following benefits to privately held companies:
In the event of a claim. D&O policies can provide legal cost coverage for a variety of claims. Specifically, D&O insurance can provide reimbursement to leaders of private companies following allegations of wrongful acts, financial mismanagement, errors in judgment and negligence. Because D&O lawsuits can occur without warning and easily reach six figures. it's critical that private company leaders arm themselves with the right policy.
D&O claims can come from a variety of sources, including employees, clients, contractors and government bodies. For private companies, claims from creditors and competitors are particularly common. D&O insurance ensures that private company leaders are protected regardless of where claims originate, providing timely and effective coverage.
Simply put, having a strong D&O policy in place makes board seats more attractive. This is because purchasing insurance shows prospective leaders that you take D&O risks seriously and are prepared to protect them in the event of a claim.
Regulatory agencies are increasing their scrutiny of private companies, making D&O insurance all the more important. Paying the cost of an attorney to defend a director or officer against a government enforcement action is expensive, and private company D&O insurance policies can help with these types of expenses.
Many private organizations don't believe they need D&O insurance. This can be dangerous thinking, as just one D&O claim can drain the personal assets of a company's leadership team. To learn more about D&O insurance, contact your insurance broker today.
Edwards Insurance took the time to understand our industry and business model. They continue to bring forward strategies to address our concerns regarding exposure to risk. Brian and his team demonstrate the true meaning of customer service and have the qualities I look for in a business relationship, trust, integrity and a timely response to insurance queries.