Running a corporate business in India comes with several responsibilities that include maintaining operations, hiring professionals, and keeping up with day-to-day productivity.
However, one crucial responsibility that is often left uncovered is to safeguard the directors and officers of any organization against legal liabilities.
Irrespective of the type of business, the directors on the board
and other senior officers make critical decisions for the company. Their
decisions, if not received well by stakeholders, can put them on the frontline
of accusations, which can be hard to deal with.
It is where you need Directors and Officers
liability insurance, which acts likes a protection cover for the board members and
officers in your company. The recent amendments to the Companies Act have also made it essential to buy
D&O insurance.
Directors and officers liability insurance is not just an additional expense. You might not know about the financial consequences of not having this insurance policy.
Internal or external disputes involving the directors can cause
hefty monetary losses, which you can’t estimate beforehand. Therefore, you must
understand the advantages of buying directors and officers liability insurance.
You Get Legal Liability Coverage
Consider a situation in which the director of an organization
faces allegations of financial mismanagement. Some shareholders believe that
the decision he or she made caused financial loss to the company, which they
denied. But the mere accusation was enough to file the lawsuit against them.
Ever imagined what you would do if something like this happens to
you or other directors in your company? The legal cost of dealing with the
lawsuit can be huge sometimes, which would end up showing a big difference in
the company’s finances. A simple way to avoid the related losses is to buy comprehensive
directors and officers liability insurance policy.
You Can Also Get PR Expenses Covered
The bigger an organization, the more attention a scam or lawsuit
gets from the consumers and media. Based on the impact of allegations against a
company’s director, there occurs reputational loss along with the financial
one. If you have been running a business for a long time, you would agree to
the fact that rebuilding the reputation of a company is a tough task and an
expensive affair as well.
Another benefit of buying a directors and officers liability
insurance plan is the PR expense coverage via add-ons. As per the terms of the
policy you choose, you can get the cost of hiring a PR consultant reimbursed,
which minimizes the losses to a good extent.
You Get EPLI Coverage
Just like investors or
suppliers, employees are also stakeholders in your company’s growth and
revenue. It gives them the right to file a case against the directors for events
like wrongful termination or discrimination at the workplace. If they are not
insured adequately, the cost of dealing with the lawsuits must be borne by your
company.
A directors and officers
liability insurance policy is helpful in such situations provided the EPLI
extension is included. While you may have an employee handbook to avoid such
occurrences, buying a D&O policy with EPLI cover is also crucial.
Buying the Right D&O
Policy Means Money Savings
The benefits of directors and liability insurance, as described above, can help you avoid significant financial loss. It is why paying the premium of this policy is worth it. Furthermore, it is crucial to evaluate the policy coverage limits before buying one.
You can buy D&O policy from renowned insurance brokers like SecureNow, experienced in suggesting the rightmost plan based on your business needs. Keep in mind that it is good to stay insured than to wait for something to go wrong.
