Administrators, managers, and directions of companies, regardless of their size and activities, carry significant responsibilities in relation to the way they conduct themselves and the trust that is placed in them. For-profit and non-profit organizations, the board of directors may face charges for fund mismanagement, employment issues, or other liability. Luckily, Directors and Officers Liability insurance is there to take the pain out of legal claims.
When directors and officers have specific duties, responsibilities, and powers, there are certain risks that come along with the positions. If a director or officer of the company is found to have acted outside of their terms of reference, civil, criminal, or regulatory, proceedings can be brought against them.
There is a growing number of governing bodies or authorities who can investigate a company, and now more attention is being focused on smaller companies.
Wrongful acts include:
If your company has directors or key managers, such insurance may be required before they are even hired. As a reliable defense for any valuable person, this coverage works to cover costs associated with compensation claims made against them by shareholders, investors, employees, regulators, or third parties. Such costs range from legal fees, and settlements, among others. Also, coverage can extend to protect the company if it is named in a suit, as well.
Bankruptcy is one of the leading causes of loss for a business, and one of the leading causes of directors and officers insurance. Bankruptcy can spark litigation against the directors and officers from lenders, customers, and investors. Even if a small company needs to downsize, employee layoffs may prompt claims personally targeting directors and officers, in addition to the business. Protect your business as a whole, as well your key members of staff with the right directors and officers insurance policy.