D&O Insurance: Critical Reasons Your Company Needs It

A business structure that includes directors and officers needs D&O insurance to shield the executives from personal exposure in lawsuits. No company plans to disappoint clients or customers, but it can happen due to poor consulting or management decisions. Here’s a look at some of the most important reasons for an enterprise to get D&O coverage.

Who Needs Directors and Officers Insurance?

Corporations, LLCs and certain private companies should consider D&O insurance as a solid form of risk management. Some companies gamble they will avoid expensive legal issues in court just by being extra careful. But mistakes might still happen that cause others financial loss, such as when a financial advisor leads an investor into a money-losing portfolio.

If your company has a board of directors, it should carry D&O insurance. But even certain small businesses should consider this coverage if they are involved with financial management for others.

Why Buy D&O Insurance?

  1. Cover legal costs – Since directors and officers make critical decisions involved with a business operation, it’s important to have a safety net for legal costs if the business faces a legal claim against specific personnel. Without D&O insurance, directors and officers can face giving up personal assets, including their savings, to settle legal disputes.
  2. Attract new investors – Companies looking to expand through investor funding need D&O insurance to show investors they’ve got risks covered. An investor who conducts due diligence will want to see risk management in the form of insurance.
  3. In case your firm goes bankrupt – Going bankrupt complicates matters for a firm’s reputation with other parties such as partners and clients. While bankruptcy helps shield businesses from financial lawsuits, directors and officers may still get sued and be held accountable for unpaid debt. This coverage pays for court costs including settlements.
  4. Pays for cyber breaches – Any business that stores confidential data in a computer system can potentially get sued if a cyber-breach occurs. Victims of a malware attack can be aggravated by identity theft, leading to financial loss and a legal complaint. This coverage pays to replace damaged hardware and software and for lawsuits resulting from a breach.
  5. Helps attract quality leaders – Your company can attract experienced managers by offering insurance that assures them they will not be held personally liable for business lawsuits. With this coverage, many decision-making professionals will join your company.

Manage Executive Risks with D&O Insurance!

The most important reason for a business run by directors and officers to get D&O insurance is to clarify what happens in a legal scenario that challenges the company’s reputation and integrity. At J. Archer Insurance Group, we offer D&O insurance coverage based on your company’s needs. Contact us today to learn more about your best coverage options.

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