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The Importance of Director’s and Officer’s Insurance for Privately Held Companies

Posted by Ironwood Property & Casualty Insurance Brokerage on Nov 1, 2018 12:21:31 PM

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In today’s environment, companies face scrutiny at every turn, especially on the directors’ and officers’ levels. Lawsuits have become increasingly normal for many, and without the right insurance coverage, companies are risking their reputation and their wallets.  

What is Director’s and Officer’s Insurance?  

Director’s and Officer’s liability insurance is an added layer of protection for the personal assets of directors and officers, as well as their spouses, if sued. Directors and officers can be sued for a variety of reasons, including: misuse of company funds, fraud, misrepresentation of company assets, and more. Defending a lawsuit can be financially devastating to a company and its directors and officers, as they can be held personally liable as well.  Having a policy in place helps give peace of mind and ease the financial burden of these claims. 

Companies without shareholders still need coverage.

While many believe that publicly traded companies are the only ones in need of Director’s and Officer’s insurance, that is far from true. While they may look at their company and assume there will never be a Director’s and Officer’s claim filed against them, hundreds of lawsuits prove otherwise. Privately held companies also require protection and should transfer their risk to a Director’s and Officer’s policy. These plaintiffs could include anyone from customers, vendors, suppliers, competitors, and more. Even frivolous suits can be expensive to defend.

Competitor lawsuits are happening more frequently.

Many competitors can sue under the federal antitrust statutes. They can also allege interference with business opportunity or hold a corporate officer liable for patent or trade infringement. With protection from a Director’s and Officer’s insurance policy, the risk of financial hardship is lessened in the event of an costly lawsuit.

No matter the reason a plaintiff may choose to file a claim against your company or directors and officers, protecting your assets with proper insurance is invaluable. At Ironwood, we ensure that our clients have all the coverage they need, including comprehensive Director’s and Officer’s policies that will provide the coverages they need should it ever be an issue. 

To find out more about Director’s and Officer’s policies or any other insurance policies your company may need, please contact Ironwood today.

Topics: Director's, Officer's, D&O Liability, Publicly traded companies, Privately held companies, Lawsuits