Directors and Officers Liability Insurance (D&O)

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Directors and Officers Liability Insurance Policy India

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Directors and Officers Liability Insurance (D&O) in India 

Directors and Officers Liability Insurance India, D&O Policy

D&O insurance protects the organization and its managerial executives from claims made against them. All the stakeholders involved in the company such as the customers, investors, shareholders, employees, etc. can sue them for committing any wrongful or unethical acts in their administrative capacity. Due to this, the personal assets of these executives are at risk. This is where a d&o insurance policy comes to the rescue. It offers compensation in case of any financial losses, defense expenses, losses due to legal action against the claimed wrongful acts, defense costs resulting from investigations and trials, and other costs the insured has to suffer due to claims of negligence, breach of duty, mismanagement or misstatements.

Inclusions Insurance Policy India Inclusions in a D&O Insurance Policy:

  • Advancement of Defence costs
  • Right to defend the coverage
  • Cover for Subsidiaries.
  • Outside Directorship coverage.
  • Retired Directors Cover.
  • Employment Practice Liability (EPL) cover.
  • Cover for failure/negligence to oversee against any Professional Indemnity related claims.
  • Cover for Regulatory Crisis Response
  • Cover for Assets and Liberty Costs including prosecution, bail bond, and civil bond expenses
  • Cover for damage to reputation
  • Cover for Heirs, Estates, and Legal Representatives
  • Bilateral Discovery Period
  • Emergency Costs cover
  • Kidnap response cover
  • Special excess safety for non-executive directors
  • Cover for pollution-related claims for defense payments and shareholder lawsuits.
  • Coverage for assets and liberty costs like bail or civil bond expenses, prosecution, etc.
  • Cover for damage to reputation.
  • Severability coverage: non-guilty insured is covered.

Exclusions Insurance Policy India Exclusions in a Directors and Officers Liability (D&O) Insurance Policy

  • Breach of contract.
  • Illegal activities.
  • Fraudulent act.
  • Dishonest conduct.
  • Punitive damages.
  • Intentional wrongdoings and errors.
  • Claims and Circumstances existing before the commencement of the insurance policy.
  • Penalties, fines, or multiple damages.
  • Claims against bodily injury and property damage.
  • Illegal personal advantages, payments, or profits.
  • Violations of legislation related to insider trading.
  • Any other exclusions that are mentioned in the policy documents.

Key Features of Insurance India  Vital features of Director & Officers Liability Insurance in India

Directors and officers of an organization are not only responsible for the management of the entire organization but are also explainable to all the stakeholders such as the investors, employees, customers, shareholders, regulators, suppliers, competitors, and the general public.

They can be held responsible for any negligence errors, misconduct, or wrongdoings that can lead to legal problems and initiate civil or criminal action against them ultimately resulting in financial losses. This can also put the company’s reputation and executive’s assets at stake.

Hence the company’s past, present, and future board of directors, as well as any employees working in a managerial position, can gain reimbursement for their losses if an adverse legal situation takes place.

Advantages of Insurance India Significant Advantages Director & Officers Liability Insurance

By looking at these benefits you will further understand the necessity of investing in a d&o insurance policy:

  • When Indian companies enter International markets, to expand their products and services multinationally, they need to purchase a Director & Officers Liability Insurance to protect themselves from legal expires overseas.
  • Nominee directors and independent directors are also answerable to the company’s stakeholders and it’s necessary to safeguard their interests as well.
  • Directors and managers are more likely to face demanding legal requirements. To safeguard the most important part of the organization from various exposures that occur due to incompliance with these legal requirements is significant for the growth of an organization.
  • Statements and actions of directors and officers of an organization are the ones that can cause the most harm to the organization’s reputation which results in the biggest financial losses. Hence it’s important to cover this risk with a d&o insurance policy.
  • Small and medium-sized companies can secure protection with a D&O insurance quote according to their budget, for their Directors and Officers from such lawsuits and claims.
  • Experts can help analyze the scope of coverage your company needs based on your risk exposure and offer you comprehensive protection at affordable premiums.
  • The right D&O insurance policy can strengthen your funding efforts and make funding smoother as most investors consider this a significant advantage for a company.
  • If a business goes under then creditors might question the organization’s leaders as to why they weren’t fully paid so a D&O insurance policy will protect the leaders financially.
  • High-ranking executives often expect Director & Officers Liability Insurance to be a prerequisite before they enter an organization.
  • You need the capital to absorb legal costs of claims against employees without putting the future of the entire company at risk.
  • D&O insurance cost in India is quite low and you can get a D&O insurance quote

based on the budget, size, and number of employees of your organization.

Need Insurance Policy Why do you need Director & Officers Liability Insurance?

There are plenty of reasons why you should buy a D&O insurance policy, given below are the most significant ones:

  • Increase in the number of defamation claims.
  • Rising number of claims against company’s executives relating to pollution, climate issues, and global warming.
  • Vulnerability of stakeholders and shareholders claims.
  • Discrimination, sexual harassment, and claims related to other social issues.
  • Irregularities in the books of accounts.
  • Investigations being performed by the government authorities.
  • Exposures related to mergers and acquisitions of companies.
  • Corporate Governance necessities.
  • Compliance with various legal requirements.