There seems to be an almost unlimited variety of insurance policies and coverage options available for large and small businesses, so you may be tempted to purchase a one-size fits all general policy and be done with it. As important as general insurance policies are, they are not able to offer financial protection for every type of risk that you may face. For many businesses, directors and officers insurance is an indispensable part of their insurance coverage because of the specific type of protection that it provides. Here are a couple of ways you can tell if you need D&O insurance.
You Have High-Ranking Positions in Your Company
If you have any high-ranking positions in your company, then you need directors and officers insurance coverage for maximum financial protection. This is because you never know when a customer or vendor will try to sue your company based on the actions of one of your high-ranking employees. Without D&O insurance coverage, your company would be faced with the heavy financial burden of meeting legal defense costs on its own.
You Work in a High-Risk Industry
Some companies are more at risk of facing a lawsuit against their directors and officers simply because of the field of work they are in. Common examples of companies that should have D&O insurance include credit unions, privately held companies, non-profit associations, publicly traded corporations, and more. If you work in a high-risk industry, make sure you have directors and officers insurance for maximum protection.