Businesses change and grow over time. Sometimes there are changes in ownership or family members assume officer positions within the business. A business owner may decide it’s time to have a board of director’s for the business. Another business or business segment may be purchased. It may be time to consider Director’s and Officer’s liability insurance for your business.
Directors and Officers Liability insurance will offer financial protection for those acting in a fiduciary role and managing the direction and affairs of the business and act with due diligence. In the absence or perceived absence of a loss to due this diligence, the officers and directors may be held liable.
Directors and Officers Liability insurance will provide coverage for the directors, officers, managers, and employees for suits brought in which it is alleged they were not prudent and caused financial harm as a result. Many business owners confuse errors and omissions liability coverage.
E & O covers product and services issues and not performance and fiduciary responsibility. It is important to review this coverage and whether Errors and Omissions coverage is also needed.
Any lawsuit brought against the company and its officers can be costly and time consuming as well as financially devastating. In this business climate, any issue can trigger a lawsuit. These issues could be a result of a financial report, a conflict of interest, a financial loss, the perception or actual evidence of fraud or dishonesty, even a company sale or merger.
Having D & O in place can reduce the risk of these types of suits. D & O insurance may also offer employment practices liability coverage as part of the policy. This insurance covers against suits brought against the company by employees for allegations like discrimination and wrongful termination. Again, this coverage is different from workers compensation.
Sit down with your licensed insurance agent to determine if this coverage makes sense for your business. As your business grows, don’t let the risk exposure grow with it.