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How do you decide on the limit of indemnity for your D&O policy?


With the growing awareness on D&O policies many organizations are showing a keen interest in taking up this policy. This policy basically protects against legal claims as a result of wrongful actions by directors and officers while performing their duties. These wrongful acts can include errors, omissions, misleading statements, breach of duty or their neglect.
The policy covers defence costs that result from any criminal or regulatory investigations or trials as a result of actions by directors and officers.
This policy also provides cover for any litigation companies might face in relation to two areas:
·         EPL-Employees practices liability
·         Securities

However a gray area that they have to contend with is finalizing the limit of indemnity for this policy. No doubt this is a challenge because unlike an asset there is no fixed value on which the sum insured can be decided.
This is because the limit of indemnity depends on the maximum claim that can come on the insured including the defence costs. However there are certain parameters that you can consider when deciding on the sum insured:
1.       Type of company, whether it is a listed company or an unlisted public company or a private company.
2.       Footprint of the company, this indicates the operation spread or the customer profile of the firm. A firm with operations in international locations is more likely to benefit from this policy. Likewise, a firm with a multinational customer profile can protect its interests through this policy.
3.       The turnover of the firm is an important determiner for the limit of indemnity.
4.       The number of employees and the capital invested in the business are important parameters especially for start-ups which do not have a past track record for performance and looking for a D&O cover.
When deciding on the limit of indemnity for a D&O policy, consider these factors and then take a call.
Have more queries on D&O policies? Send them to enquiries@zeninsure.com or call us at +91 9848884363. We would be glad to help you out and guide you on buying a policy suited to your needs.



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