What Does D and O Insurance Protect Against?

All businesses carry some element of risk, and directors and officers insurance is designed to help alleviate some of that risk. The level of risk your business faces depends on what your company does, where you operate, your business partners, your clients, and on and on. In fact, there are so many variables when it comes to business insurance, that there are tons of packages and policies, each one designed to protect a company from a different type of risk. In the case of D & O insurance, this type of insurance will protect your organization and all your directors and officers from assuming personal responsibility in case a claim is ever brought against your company. But what exactly does directors and officers insurance protect against?

Employment Related Issues

It's said that over 50% of directors and officers cases are brought because of employment related situations. This can include discrimination, harassment, wrongful termination and many other instances where the employee feels that he or she was treated unfairly as compared to everyone else. If you fire an employee and that person doesn't agree with your reasons, you could find yourself defending against a very expensive D & O claim.

Failure to Provide Services

If, as a wedding photographer service, you agree to the Smith wedding and your photographer doesn't show up due to car trouble, your company could find itself with a directors and officers claim.

Mismanagement of Assets

In this case, a shareholder could accuse one of the company's board of directors of mishandling the company's funds. It could be charged that the board member used the company to serve his own agenda, and in the process hurt the company's reputation and bottom line. In this case, the board member would be held personally responsible and his personal assets could be jeopardized.

These are just a few examples of why your company or organization needs directors and officers insurance. These are only examples and your company may never face anything like them. That's because D & O insurance policies are evaluated on a case-by-case basis, with each company requiring a different type of coverage. The type of coverage your company needs will depend on what your company does, who you work with, what type of customers you have, the industry you work within and much more.

The only way to keep your company and your company's directors and assets safe is to make sure you have that umbrella protecting you from all that risk.

This is why it becomes necessary to speak to your business insurance provider so that you can find the policy that contains the protection you need against these and other common claims that can cause a company to become insolvent overnight. Employee claims, claims by shareholders and even claims by customers are increasing in occurrence due to our ever-litigious society. Make sure your company is protected by talking to your insurance representative about D & O insurance today.