Directors and Officers Liability Insurance can be a very helpful policy, helping protect a company from some potentially astronomical expenses. As vital as this policy may be in business insurance, there are still many myths and misconceptions about Directors & Officers insurance that need to be addressed and resolved. As a top risk advisory expert and leading insurance broker in Mumbai, we at Raghnall have put together a list of some of the most common misconceptions about it out there.
Busting Some Common Myths About Directors & Officers Insurance
● Myth 1: D&O Insurance covers property damage.
Fact: Many are under the misconception that Directors and Officers Liability Insurance coverage includes property damage when, as a matter of fact, it does not. Not only does the D & O insurance policy not end up compensating for any claims of property damage, but the insurance policy also does not cover claims of bodily injuries. Whatever form of property damage or bodily injuries that is suffered by any third party will not be covered by D&O insurance policy.
● Myth 2: It is mainly meant for bigger organizations.
Fact: It is commonly believed that only bigger companies need to get directors and officers liability insurance as organizations of a smaller size are less likely to undergo an investigation. However, this is a grave mistake, as D&O insurance will be particularly vital for smaller businesses like MSMEs as they would require the same level of financial means as a bigger company would have to defend such a case. It would be foolish to presume that a smaller company is less vulnerable to an investigation than a larger company, the standing of the company does not have much to do with the possibility of being investigated.
● Myth 3: Investigations cannot be carried out after a Director/Officer leaves the organization.
Fact: Contrary to popular belief, a director or officer can still be put under investigation or be subject to legal action even after they leave an organization. This can be for anything that might or might not have occurred during the individual’s time at the organization, and the head at the organization will not necessarily allow for the costs of facing an investigation to be covered by the D&O insurance policy. This is another major reason why it is worth looking into directors and officers liability insurance, no matter the size of your company.
● Myth 4: D&O Insurance can provide coverage for prior claims.
Fact: Directors and officer liability insurance does not provide any sort of coverage for any claims that may have taken place at a time before the policy has been initiated. A D&O insurance policy does not take into account any sort of claims for circumstances that may have taken place before the policy’s commencement. It will only provide coverage for any situations that may arise following the policy’s initiation.
Directors and Officers liability insurance can be highly beneficial for a company for a number of reasons. Not only does it provide coverage for any expenses that may come up from legal issues, but the company also becomes a vastly more attractive prospect for any candidates who are looking to fill any managerial positions - in the same way workmen compensation insurance makes a company more attractive to potential workers. Raghnall provides top-of-the-line risk advisory solutions and is one the leading insurance brokers in the country. Our experts can curate the best D&O Insurance coverage and other business insurance solutions for your company.
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