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Directors and Officers Insurance

Directors and officers insurance is an essential insurance policy available for most companies.

The reason that this kind of insurance exists is to protect anyone in a position of higher authority within the infrastructure of a company, from being sued for anything that they had to do in relation to their duties and responsibilities as afforded to them by the specific company they are working for and their job title.

This is certainly not a type of insurance you hear mentioned on a daily basis; however those that run companies large or small, that are familiar with someone trying to take advantage of their success through the legal process of suing would be able to easily recognise the importance of directors and officers insurance.

Why Use Directors And Officers Insurance or D&O Insurance?

Whenever someone has to make an executive decision that will cause a loss to their client it is a danger that the company will be sued in order to recuperate the loss. However, with all of the dishonesty that runs throughout the legal system today, people can be sued for many times the amount that they actually lost through their dealings with the business in question.

A mix up that would have originally cost a few thousand pounds, with non-quantitative issues such as pain and suffering tacked onto the original issue can end up costing into the hundreds of thousands in repayment, and that isn’t even counting the court fees yet. This would be enough to bankrupt lots of small businesses, so for them, it is absolutely essential to have directors and officers insurance.

It may be a steep fee, but in order to protect the integrity of the company as well as to keep them in business, it is a necessary thing. It can also be positive psychologically for all of the people that are in positions of power within the company because they will all be able to function with a little less stress on their shoulders knowing that if they do make a mistake, it won’t be the end of the world. It is a small pro, but it is one of the many pros that outweigh the cons in the decision on whether to purchase directors and officers insurance or not.