Executive-level decision-makers, directors, and top officials play a crucial role in the operations and profitability of an organization. They hold so much power, and if they misuse it, they can cause catastrophic losses to an organization.
A company may be slapped with a hefty fine if its director is found guilty of issuing a misleading statement. Fortunately, companies with D&O insurance may not need to worry about the cost of the lawsuit and settlement.
Today’s increasingly complex legal environment means businesses face a huge risk of legal liabilities and litigations. Without D&O insurance, most companies could not attract or keep top managerial talents, given the potential risks in the role.
If you want to protect your business from loss related to litigation claims, consider speaking to a professional commercial insurance provider.
Risks Covered By D&O Insurance
Misrepresentation in a Prospectus
The insurance helps pay for claims arising from misrepresentation in a prospectus. For instance, a company can be fined up to three times the value of the misrepresented stock.
Unfair Competition
It can cater for costs incurred when defending claims of unfair business practices, e.g. false advertising, trademark infringement, theft of trade practices, or use of privileged information by a former employee to solicit customers.
Wrongful Termination
If a director dismissed an employee without reasonable grounds, the company could be sued for wrongful termination. D&O insurance can cover medical expenses, lost benefits and earnings, punitive damages, and legal costs.
Breach of Contract
A company and its director can be held liable for breach of contractual obligations, including supplies, advertising, or employment. When a breach of contract occurs, the party who failed to abide by the agreement must pay for the damages incurred by the other party.
Regulatory Investigations
The insurance package can cover costs incurred to defend yourself during regulatory investigations. Similarly, D&O insurance can help pay for complying with regulatory requirements.
Who Needs D&O Insurance?
D&O insurance is necessary for all companies, with managers, directors, top-level officials, and executive-level decision-makers. Directors and managers have duties, powers, and responsibilities related to their positions.
If a director is found to have acted outside their terms of reference, they and the company they represent can face civil, criminal, and regulatory proceedings.
If directors and officers do not have proper insurance, they face a greater risk of being unable to defend themselves against:
- Disqualification from holding office
- Hefty legal costs and award for damages
- Fines
Standard Exclusions of D&O Insurance
- Intentional criminal acts
- Illegal personal payments or profits
- Claims made under past policies
- Uninsurable policies and fines
Shield Your Company From Top-Executive-Related Liability Today
An inaccurate disclosure of the company’s financial status can mislead many stakeholders. Consequently, the company can find itself in court defending litigations from investors, stakeholders, state authorities, supplies, and creditors.
The risk of litigation and unforeseen financial losses highlight the need to shield your business with D&O insurance.
At Panorama Insurance Agency, we’ve been in the insurance industry for approximately 50 years, highlighting our knowledge and experience.
Contact us online or call us at 818.579.9663 to request a free quote.
