5 Critical Reasons You Need D&O Insurance

Directors and officer’s (D&O) insurance protects the personal assets of executives when an organization is unable to extend indemnity to its executives. The risk exposures covered by this coverage are not covered by any other policy and it is specifically designed to protect management. Directors and officer’s liability insurance provides an organization with the ability to mitigate its management-related exposures to cover losses in the event of a covered claim. Here are five reasons that your company should acquire D&O Insurance coverage.

Attract Quality Leaders

Organizations actively seek the best management team to lead operations. However, the market for recruiting quality directors and officers is quite competitive. Experienced candidates will want the organization that they work for to obtain D&O insurance coverage prior to their commencement to ensure that their personal assets are not at risk.

Investor Requirements

Organizations planning future expansion often seek financial help from outside sources. The common funding methods often take substantial ownership and interest in the performance of the organization. Investors may require security over their investment in the form of D&O insurance to cover the right of recourse against executives if there was a failure in managing its operations with the required care, skill and diligence.

Protect the Balance Sheet

When an organization is faced with reimbursing management according to its corporate indemnification provisions, the financial loss can be devastating. These losses are reflected on its balance sheet, and can greatly impact the organization’s performance long after a claim is settled. D&O claims have the potential to be catastrophic on a business, which is why the coverage is so important.

Risk Management Process

Organizations who operate with D&O insurance coverage are far more prepared when problems arise. Those without a dedicated risk and compliance department are reactive to the legal exposures faced by management on a daily basis.

The reporting methods of D&O insurance formalizes the risk management process, therefore allowing for a proactive approach to claims mitigation.

Protect Directors & Officers Assets

Society has been increasingly litigious, and the leaders of all organizations are exposed to directors and officer’s liability. With a company’s well-being resting in the hands of the management, executives can easily become preoccupied with the potential consequences of their decisions. While remaining accountable for their actions, Directors & Officers Insurance allows executives to keep their focus on making the best possible decisions for a company, rather than feeling overwhelmed by the exposure of their role.

About Transparity Insurance Services

Transparity Insurance Services was founded for the purpose of helping clients to ensure their property and assets with no hassle. We are committed to providing a simple, easy, efficient, and positive experience to all of our clients, and prioritize open and transparent communication with our clients. Through our excellent customer service and technology, we can help you to find the right insurance program at a competitive price. Contact us today at (855) 889-2037 to learn more about what we can do for you.