Navigating Boardroom Risks: Why Directors and Officers Insurance Is Essential

The top brass take on more risk than everyday employees, which can put their personal assets at risk in the event of litigation. Even the board of directors, which represents stakeholders’ interests, is vulnerable. While general liability insurance is essential for protecting your company, it won’t cover directors and officers (D&Os). To do so, you must add D&O coverage to your business insurance policies.

Understanding Boardroom Risks and the Need for Business Insurance

Umbrella policies cover liability for the corporation. For example, if a customer gets injured on your property and sues you, general liability covers the court costs, including a settlement. 

However, it doesn’t protect individuals, putting their homes, vehicles, and other valuable assets at risk. Individuals also have to cover their own legal costs, which can become a burden if litigation drags on.

Why would anyone sue a board member or a corporate officer? These individuals make major decisions for companies, so they are arguably responsible for the organization’s behavior. A third party and even investors may sue directors and officers for the following:

• Lack of corporate governance
• Misuse of company funds or fraud
• Misrepresentation of company assets
• Breach of fiduciary duty
• Noncompliance with workplace laws

Regulatory agencies may also bring legal action, depending on the industry and state laws.

Addressing Risk Management: Directors and Officers Insurance

Directors and officers insurance fills gaps in basic business insurance policies. Comprehensive coverage ensures that individuals in high-level positions, including C-suite roles, can do their jobs confidently without litigation concerns. In fact, a potential candidate may pass on an offer if the business doesn’t have adequate coverage.

What should you look for in a D&O policy? There are three essential types of coverage:

• Corporate risks and assets
• Reimbursement to officers and directors upon indemnification
• Claim payment for officers and directors upon company bankruptcy, inability to pay indemnification, or refusal to do so

Tailored D&O Plans With Byrnes Agency

Customized coverage is vital to fully protect directors and officers at both public and private companies. The first step is determining the greatest risks and their likelihood of occurring. This information lets you prioritize coverage for threats that may significantly harm your business.

Why not opt for the most comprehensive coverage available? While this might be the right fit, it may provide things you don’t necessarily need due to your industry or size. As a result, you may end up paying for protection you never use. Collaborating with an experienced agent lets you get the most value for your money.

Additionally, an agent can help you adjust your business insurance as your needs change. Corporate growth often introduces new risks, which you should address as soon as possible. 

Finding the Right Business Insurance

The right business insurance can mean the difference between recovery and disaster. For board members and C-suite officers, this coverage extends to their personal property and reputations. 

If you want to protect your company and create a secure environment for your directors and officers, consider adding a D&O policy. Byrnes Agency can help with tailored insurance solutions. To get started, contact us today.

About Byrnes Agency

At Byrnes Agency, we offer insurance solutions that can be tailored to meet your specific needs. Whether you’re looking for personal policies or commercial coverage, we have the right coverage for you. To learn more about our products, contact us today at one of our two locations.

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