Insuring Directors and Officers of Small or Private Companies
Directors and Officers Insurance (D&O) is liability insurance that is intended to financially protect the leaders of a company, by providing reimbursement for losses or advancement of defense costs in the event that an insured suffers a loss that is a result of legal action brought against them for wrongful acts. It has long been assumed that this type of insurance coverage is only necessary for large and public companies, since they have the most exposures. While it’s true that a lawsuit against a business of this nature may be more high-profile, a lawsuit against a director or officer of a small or private company potentially has more to lose, finance-wise.
The most important thing to remember about lawsuits against business leaders is that the business doesn’t have to have shareholders in order for its directors and officers to be personally sued. Another important factor for small businesses and private companies to keep in mind is that general liability insurance and umbrella business insurance policies will not usually cover claims involving directors and officers.
A business of any size can have officers and potentially directors who can be targeted by customers or employees over the management of their business dealings. Unfortunately, smaller companies don’t always fully understand the value of D&O coverage or what risks are covered by the policies. These types of claims against small or private companies can arise from a number of situations; this can include breach of contract issues or leaking personal company information, to a variety of other exposures.
At PLRisk Advisors, we have the experience, knowledge, and markets to secure the policies your clients require. We can help secure Directors and Officers Insurance to protect them and their companies in the event there is an allegation that they have failed to perform their duties.