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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