Securing the right directors and officers (D&O) liability coverage at the right price requires research, comparing offers and weighing pros and cons. Certain producers specialize in procuring D&O cover for their clients seeking insurance. Business owners should compare coverage in a marketplace that remains relatively competitive and where policies differ from one company to the next.
You should also have a team responsible for safe practices and ensuring that proper levels of D&O coverage are always maintained. Risk management is essential in protecting personnel from becoming embroiled in D&O claims and someone should be providing valuable counsel for interpreting existing insurance policy exclusions and resolving any insurance disputes. Moreover, risk management teams should pay close attention when renewing policies from year to year as new trends in the D&O market emerge.
Coverage that is worth the cost
Higher premiums often reflect better coverage, and you ought to consider the breadth of coverage, the insurer’s reputation and their financial stability as well. In this era when litigation is often rampant, one should steer away from products that combine D&O and employment-practices liability (EPL) coverage, which may reduce available limits to directors facing securities-fraud exposures. Two separate and independent policies are often the better choice. Find a broker familiar with this policy and well informed about available resources with an expertise regarding this type of policy.
Comprehending the policy language
Directors, officers and risk managers can never have too much knowledge in this area, and articles and conferences are regularly available with information on key issues such as securities liability, employment practices, corporate governance and other current, topical issues such as subprime lending and privacy issues as they impact directors and officers.
Review any and all impartial and objective information, perhaps even consider obtaining a subscription to various paid and independent services in order to gain more impartial and valuable advice. In addition, some law firms issue free and periodic newsletters on important case law and industry developments pertaining to d&o cover. In order to gain a balanced perspective, sign up for newsletters from firms that practice on behalf of policyholders and those that practice on behalf of insurers.