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Young ExecutiveThe structure of most companies usually includes a certain level of managerial structure. Directors usually reside at the top of the company pyramid. They also likely oversee a significant portion of the company's daily decision-making.

A company’s structure also places different levels of risk upon each tier of employees. Directors and officers assume different levels of risk as opposed to other employees.

High-level employees assume different risks when they take on their roles. It is important to protect those employees duly. As an insurance agent, you have an obligation to inform policyholders about how best to cover their employees. In many cases, business owners need directors & officers insurance coverage (D&O coverage).

Keep these D&O insurance facts in mind when enrolling a client in business insurance.

What is D&O insurance?

D&O insurance falls into the realm of liability coverage. It means to protect employees who have a much higher pull over the company’s direction.

This type of coverage specifically covers directors and officers in your company. It extends a high level of liability coverage to the directors of the organization. This level is often higher than that which covers lower-tier employees.

Why do you need D&O coverage?

Directors often act internally and externally on behalf of the company. They make decisions other employees follow in order to move the company further. They also usually play instrumental roles in bringing new business into the company.

Because of the leverage they have over the company, directors often stand to cause losses to the company. A mistake on the part of the director could cause a trickle-down effect. This could cost a company financial assets in the process. A director’s miscalculations could cause the employees to act on bad or damaging advice. These mistakes could even cause harm to the company’s clients.

How to use D&O coverage

Should a director’s mistake cause the company to lose money, D&O insurance may help recoup some of the damages. These mistakes may include allegations of hiring discrimination or mismanagement of funds. If someone makes a damages claim against your business, you might use this coverage to pay the defense costs.

However, simple losses of finance may not have coverage. If you lose a contract because a director wasn’t prepared, you likely can’t use coverage. Furthermore, intentionally negligent acts could cause insurance coverage to lapse.

Get in touch with us today. We can help you get a fast, free D&O insurance quote. Give us a call at (800) 460-6424 for more information.

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