What is it?
Many small and medium-sized business owners think they don’t need Directors & Officers (D&O) Insurance as it’s only relevant to large multi-national companies. However, D&O insurance is just as important to SME’s as any other business.
What it covers?
D&O Insurance protects the personal assets of business owners and managers who run companies, as they are personally liable for any decision, action or inaction they make within the business.
Whilst your senior management and executives may make honourable decisions and actions, mistakes can still happen. Even if the individual in question has not acted improperly, the cost of investigating and then defending an allegation, which could prove to be unfounded, can be many thousands of dollars. It can also divert large amounts management time and effort, distracting them from their core business focus.
D&O Insurance gives directors, managers and officers, both past or present, the peace of mind knowing they’re insured against legal costs as well as any penalties or damages that may result from a claim or investigation.
Typical claims that can be covered under these policies include HR and employment issues, breach of contract, decisions that exceed their authority, misrepresentation, inaccurate reporting, regulatory and legal non-compliance.
As a matter of course, directors, managers and officers usually make these types of decisions daily, so it pays to ensure they’re fully covered if any regulatory or legal claims or investigations are made against them.
One option to consider is a Management Liability (ML) policy. This packaged policy is designed specifically for SMEs to protect the individual directors and officers, as well as the company in relation to the exposures of managing a company.
The key elements of ML cover include:
- Directors & Officers Liability
- Company Reimbursement
- Employment Practices Liability
- Statutory Liability
- Trustees Liability
- Internet Liability
- Kidnap, Ransom & Extortion
An Insurance Advisernet Broker is ideally placed to discuss your specific business situation with relation to this type cover. History for many businesses shows it’s a conversation well worth having.