When companies commit wrongful acts, they encounter consequences in the form of legal claims. In some situations, company directors and officers are held directly responsible and required to pay significant financial damages. In such cases, directors and officers liability insurance functions as a valuable source of protection.
Who Needs D&O Liability Insurance
Some may think that this type of insurance is only for large corporations, but in reality, companies of all kinds depend on this sort of coverage. Directors and officers work in a high-risk environment. If relationships with clients, employees, or stockholders turn sour, then these professionals may find themselves facing an expensive lawsuit. Liability insurance prevents directors and officers from bearing such a weighty financial burden on their own.
Reasons Behind Legal Claims
Directors and officers are sued for a variety of reasons, including the misuse of company funds, failure to comply with workplace laws, and fraud. Claims over employment practices are by far the most common reasoning behind a lawsuit, and this occurs frequently in both private and public businesses. With claims arising for any number of reasons, directors and officers cannot afford to go without financial protection.
Directors and officers liability insurance extends protection in a wide range of scenarios. Companies should acquire a policy if they have not done so already. Liability insurance provides an unmatched level of financial security.