Loss prevention program of an effective D&O has various objectives especially for those under the non-profit organization. The objectives may include but not limited to the following:
- Lower down the exposure liability
- Developing the ability of the company to hire qualified directors and officers
- Prevents time consuming and embarrassing claims
- Boosting claims justification and lessen the probable recovery by claimant
- Developing the ability of the company to acquire amicable D&O insurance coverage at a reasonable rate.
One way to identify that the directors and officers insurance loss and prevention program is effective are through detailed educational trainings to board members and usage of loss prevention guidelines. However, the succeeding paragraphs will only give emphasis on the identification of different areas in the way D&O loss prevention potential may be present and should be taken into account. This is one of the secrets to have freedom with your finances on your business.
Coverage of a Directors and Officers Policy
D&O insurance policies are formatted for various claims charging harm accountable to the company’s management.
The terms under each policy may either have a broader and narrower coverage compared to the claims contrary to the board. It may become broader once the policy covering the claims is against the company together with the staff and with the exclusion of the board members. On the other hand, the policies tend to be narrower once all types of claims versus the boards are not being covered. Moreover, this kind of insurance do not include body injury or damage of the property under its coverage.
Features of Directors and Officers Policy
What the companies’ needs must determine the features that entail inside the D&O policy. These features may identify the primary benefits and possible drawbacks of the policy. The items below may be included in its desirable features:
- Wide coverage
- Justification costs for claims exclusion
- Insurable incidents coverage which happened before the effectivity period of the policy
- Protection of directors unaware of the misrepresentation in the application policy
- Sufficient notice of cancellation
Primarily, it would be based on the circumstances of the company and even the involved employees in case of determination of the worth of the additional features. It is very much preferred that the coverage would be extended to the company, staffs, and other employees excluding the board members. Companies with low financial budget must be amenable on both the costs advancement and deductibles, even the co-payments, if there is any.
Tabulation of the features of D&O Insurance Policy
- Insurance premium
- Policy restrictions
- Deductible
- Participation
- Coverage for the company, subsidiaries, advisory boards, employees, and volunteers
- Covered claims
- Exclusions
- Justification of claims exclusions
- Advance expenses
- Prior acts coverage and extended reporting period availability and cost for claims-made policy
- Protection coverage for innocent directors
- Cancellation and notice