If your company runs a Board of Directors, members of that board can fall prey to legal issues stemming from their duties. Whether you’re a public company, privately owned firm, a non-profit, or an association, the directors and officers and executives of your organization face exposures that put at risk the company’s assets and even their own personal finances.
Newmark Insurance in Austin can provide you with Directors & Officers (D&O) insurance designed to protect a company and its executives against allegations of wrongdoing in their capacity as directors and officers. The fact is that claims can be brought by the company’s stakeholders, customers, consumer groups looking to lay blame, or competitors looking to advance their own agenda. Even business partners (vendors and suppliers), and government enforcement/regulatory groups could find cause to bring about litigation.
Those appointed to the board will insist on D&O coverage
In many cases, when you appoint directors or hire new officers they will demand D&O coverage as a condition of serving or employment because they don’t want to be concerned that their personal assets could be at stake. Sometimes outside investors (such as venture capitalists or other financiers) will require D&O policies before providing funding to your business. They consider having this coverage in place as one way to protect their investment.
Directors and officers are sued for a variety of reasons, including misuse of company funds, misrepresentation of company assets, fraud, failure to comply with workplace laws, and lack of corporate governance among other issues. The simple process of hiring employees potentially exposes directors or officers to employment practices litigation (EPL), which may be covered by some D&O policies. However, it may be best to purchase a separate EPL policy that protects not only the directors and officers, but also the company itself.
Claims over employment practices are now the most common lawsuits brought against those in a company’s management positions. As with any type of insurance coverage, small and mid-sized businesses should work with professionals familiar with the associated exposures.
Newmark Insurance in Austin can provide an agent or broker who understands D&O policies and the intricacies involved in coverage. D&O may be offered with a portfolio of other products, as well.