If someone sues your insurance agency, they might name both the agency director in the proceedings. In such a development, both parties might have protection under the business’s liability insurance. Still, directors might face more scrutiny for which they need extra coverage. They thus can often enjoy the extra coverage offered by directors & officers insurance. Why is this an important piece of protection for your business?
Any insurance agency principal should talk to their insurer about D&O insurance. Often, it’ll prove beneficial in tough situations.
How does D&O insurance work?
Commonly, a company’s directors or governing board will face scrutiny after a harmful occurrence impacts operations. The affected parties take action, they might place some of the blame on these individuals.
In such situations, D&O insurance can protect a principal’s personal assets targeted by a claim. It adds protection alongside the business’s E&O or general liability protection. Given the personal risks faced by many in high positions, this coverage might prove extremely beneficial to their personal protection. Indeed, many prospective executives will request a company to provide this coverage before they will accept a position.
Let’s look at this policy in the context of your insurance company. If you are an agency head, you have a lot of pull over the company’s direction. Therefore, if you make a mistake, the company might suffer for it. Maybe someone within the company sues you for misuse of company funds. The accusation might prove totally false. However, the resulting legal fees, along with any settlements, might prove costly.
In this case, a claim on your D&O policy might help you personally protect your own assets. Not only that, it’ll help the company as a whole recover from potentially-serious allegations against it.
What does your D&O protection cover?
If your agency must face a claim against you, pull out your D&O coverage. Depending on your policy, it might cover you against claims like:
- Failure to follow workplace law
- Breach of contract or fiduciary duty
- Misuse of funds and fraud
- Misrepresentation of assets
- Copyright violations and theft of intellectual property
Nevertheless, your policy likely won’t cover you against intentional or illegal acts. It’s your responsibility to adhere to the highest industry standards for the agency. Also, talk to your agent at 800-460-6424 about your unique agency needs. They can help you determine the right type and amount of coverage for your overall needs. Don’t hesitate to get protection today.
Also Read: How Much D&O Insurance Do You Need?