Directors and Officers Insurance: Don’t Let Your Clients Dodge Risks
Many private-company executives debate a continual conundrum. Do you really need directors and officers insurance or privacy and network security coverage? Is the risk of forgoing these coverages small enough to get by with just a general professional liability policy?
What many clients don’t realize is general liability policies may not respond to data breaches or management liability lawsuits. And some coverage gaps may not cover financial lost arising from mistakes or missteps by the company’s directors and officers. Even if the company is private, the top executives can become a target for a directors and officers lawsuit for a variety of reasons, including misuse of company funds, fraud or negligence. Even hiring practices can expose top management- employment practice litigation is the most common lawsuit that was brought against company management, according to Best’s Review.
And, the costs can be significant. One estimate by a national insurer found that 12% of survey participants experience a directors and officers liability lawsuit in the last five years. The costs to settle and/or litigate those cases average $225,682. Some losses even approached $5 million.
Private companies must recognize that even though they are significantly smaller than other companies, they do not fly under the radar when it comes to their business’ exposures and liabilities. Private companies need tailored D&O policies that reflect the exposures private businesses face.
At PLrisk Advisors, we offer Directors and Officers insurance specifically tailored for private companies. We have the experience, knowledge, markets to secure the policies your clients require. We can help secure them Directors & Officers insurance to protect them and their companies in the event there is an allegation that they have failed to perform their duties. Contact us today for more information.