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.
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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.