Posts Tagged "directors and officers insurance"

Insurance Policies for Business Owners

Posted by on Aug 27, 2015 in News | 0 comments

If you are a business owner, you should consider purchasing the following insurance policies to ensure that your company is protected: General Liability Insurance: Even if your business is home-based, it needs liability insurance. This policy provides both defense and damages if you, your employees or your products or services cause or are alleged to have caused Bodily Injury or Property Damage to a third party. Property Insurance: Do you own your own building? Do you have personal property in the building including office equipment, computers, inventory or tools? Then you should consider purchasing a policy that will protect you if you have a fire, vandalism, theft, smoke damage etc. You may also want to consider business interruption/loss of earning insurance as part of the policy to protect your earnings if the business is unable to operate. Business owner’s policy (BOP): This policy packages all required coverage a business owner would need. BOP’s will often include business interruption insurance, property insurance, vehicle coverage, liability insurance, and crime insurance . You can alter what is included in a BOP based on your company’s specific needs. A business owner will save money by choosing a BOP typically because the bundle of services often costs less than the total cost of all the individual coverage’s. Commercial Auto Insurance: This type of insurance protects a company’s vehicles such as those that protect vehicles that carry employees, products or equipment. Commercial auto insurance insures your work cars, SUVs, vans and trucks from damage and collisions. Don’t have company vehicles, but employees drive their own cars on company business? Then you should have non-owned auto liability to protect the company in case the employee does not have insurance or has inadequate coverage. Many times the non-owned can be added to the BOP policy. Worker’s Compensation: Worker’s compensation provides insurance to employees who are injured on the job. It provides wage replacement and medical benefits to those who are injured while working. The employee gives up his rights to sue his employer for the incident In exchange for these benefits. It is very important as a business owner to have worker’s compensation insurance because it protects yourself and your company from legal complications. State laws vary, but all require you to have workers compensation if you have W2 employees. Penalties for noncompliance can be very high. Professional Liability Insurance: Also known as Errors and Omissions Insurance this policy provides defense and damages for failure to or improperly rendering professional services. A general liability policy does not provide this protection, so it is important to understand the difference. This type of insurance is applicable for any professional firm including lawyers, accountants, consultants, notaries, real estate agents, insurance agents, hair salons and technology providers just to name a few. Directors and Officers Insurance: This insurance protects directors and officers of a company against their actions that affect the profitability or operations of the company. For instance, if a director or officer of your company, as a direct result of their actions on the job, finds him or herself in a legal situation, this type of insurance can cover costs or damages lost as a result of a lawsuit. Data Breach: Does your business store sensitive or non-public information about employees or clients on their computers, servers or in paper files that they are responsible for protecting? Then you need this type of insurance should a breach occur either electronically or from a paper file to provide protection against the loss. Homeowner’s Insurance: Do you office out of your home? Homeowner’s insurance is one of the most important kinds...

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Directors and Officers Insurance Coverage

Posted by on Jul 23, 2015 in News | 0 comments

On average, there are 1,285 claims made per year against directors and officers. It is not uncommon for this type of claim to end up costing millions of dollars.  The average overall cost of D&O claims in 2014 was over $51 million. These claims are not limited to large, publicly-owned organizations. Businesses and organizations of any size have risk. This includes privately-held firms, for-profit businesses, non-profit organizations, and educational institutions. Watch this short video via our partner Chubb Insurance as a top executive learns that D&O liability insurance – and not his company’s GL policy – will help protect him against certain types of lawsuits. So what is Directors and Officers Insurance? D&O insurance is designed to protect board members, directors, officers, and managers from allegations of wrongdoing brought against them in regards to their role in the governance of the organization. It is liability insurance that provides personal financial protection for company officers and directors as individuals. What Exactly Does D&O Cover? It covers claims that arise against directors and officers from actions they have made that have resulted in negative financial consequences for the organization, including: Actual or alleged wrongful acts Decisions Omissions For listed stock companies D&O insurance can also cover claims that arise from a wrongful act in connection with the trading of its securities. Defense costs and financial losses that result from claims against directors and officers are also covered under a D&O policy. Within the limit of liability, some D&O policies include defense expenses. What does this mean? The cost of defense expenses will be taken out of the total amount of insurance available to pay the claim. Now, some types of claims don’t involve a significant defense expense, while other types of claims have the potential of using most, if not all, of the liability limits. If the company has paid the claim of a third party on behalf of its managers, in some cases the policy will cover the insured company. Most of the time, these policies are written to cover claims on a “claims-made basis,” which means claims that are made while the policy is in effect. In some cases, a policy will have an extended reporting period where claims can be reported after the policy has expired. Called a retroactive period, generally, a D&O policy will also cover claims for wrongful acts that took place before the policy’s inception. Let’s Take a Look at What is Not Included Under D&O Coverage Where the Claim Arises from the Following: Breach of contract Bodily injury Acting for personal profit Property damage Fraud Dishonest acts Pollution Intentional acts of noncompliance Claims made under a previous policy Claims covered by other insurance Keep in mind that corporate by-laws and/or indemnification agreements do not provide complete protection against D&O risk. Who is Protected by D&O Insurance? Directors Officers Managers Committee members Employees Sometimes volunteers who are acting under the direction of the organization. What Type of Exposures do Directors and Officers Face?  Securities litigation Allegations of misrepresentation Regulatory actions HR issues Employment practices Reporting errors Shareholder actions Failure to comply with regulations or laws Inaccurate or inadequate disclosure Making decisions that exceed the authority granted to the officer Other breaches of fiduciary duties Employee Piracy is another area of growing risk to directors and officers. How does this occur? When a key employee has left the company to either join a competing organization or start their own company. Because of this breach, the previous employer could end up suing the firm the past employee has joined as well as the directors and officers of that...

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