Why Your Business Needs Directors and Officers Insurance

Business owners face a lot of risks. With this, acquiring various insurance plans is necessary.
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If you own a business and have high-ranking business officers, you might want to consider purchasing directors and officers Insurance.

What is Directors and Officers Insurance?
Directors and officers insurance, or D&O insurance, is the kind of insurance policy that protects a business’s officers, directors, and other high-ranking officials. D&O provides coverage for legal action from other individuals such as investors, competitors, and customers. 

Typically, lawsuits are based on negligence or committing “wrongful acts” like misinformation and knowingly tolerating harassment. These lawsuits usually lead to bankruptcy because of the many expenses a business can incur, like investigation and legal fees. 

With this, purchasing D&O insurance is quite necessary. 

Do You Need D&O Insurance?
Although many companies acquire D&O insurance policies, having one is not necessary. However, lawsuits covered by D&O have increased through the years, especially those against senior executives and CEOs. With this, it’s best to invest in a D&O plan if your business has a corporate board.

Here are some of the factors that make a D&O insurance policy necessary for a business.

1. Growing Businesses Need More Room for Liability
   As businesses grow, the number of areas that need to be appropriately addressed also increases. It’s also essential to know the two significant liability areas: data protection and healthier employment practices. Therefore, as your company grows more prominent, the risks you face become larger. D&O insurance policy protects you from these risks.
   
   
2. Active-Investors
   Over the years, investors that hold companies liable for their actions gradually increase. Investors don’t only want to improve corporate practices. They also ensure that people are held accountable for the company’s shortcomings. Moreover, some businesses have been unable to recover because of financial losses due to D&O lawsuits.
   
   
3. Financial Risks
   As mentioned, businesses face many risks. Among many others, high-ranking business officials face financial risks that could lead to bankruptcy. Moreover, breaching a duty or an obligation can cause an official to incur many costs, including:
       - Compensation for the aggrieved
       - The other party’s legal expenses
       - Own legal expenses

Final Thoughts
As mentioned, acquiring a D&O plan isn’t required. However, given the many risks officers and businesses face, it’s better to be prepared. Moreover, protecting yourself from a D&O policy will help you minimize your expenses for when you’ll need it.

At Howe Insurance Brokerage, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (435) 674-8771 or Click Here to request a free quote.