Your Private Business is Exposed to Directors and Officers Claims

Every business, no matter what the size, has a D&O exposure.  Some people may mistakenly think that D&O risks are just for large firms, but actual court cases tell a different story.  D&O claims come about because of decisions made by the firm’s officers and employees.  Claims can come from employees, competitors, investors, and the government.  Most of these kinds of claims are not covered under a standard commercial insurance policy.

Here are some interesting facts brought to you by the Insurance Information Institute:

• Over 53% of privately held firms have had D&O related claims.
• Twenty-five percent of companies have had an employment related claim.
• The average defense cost for a D&O claim is around $75,000.
• Firms with less than 50 employees have the same percentage of claims as larger firms.

Here are some of the kinds of claims to which your business is exposed:

Misrepresentation
If you misrepresent your company’s services, financials or other information, third parties may sue you for your actions.  This can include services you say you provide on your webpage or financial information you provide to a lender.

Breach of Duty
Your firm’s officers and employees are required to carry out their duties with a standard of honesty and professionalism.  If these legal duties are breached, you are subject to litigation by the injured party.

Employment Issues
Your employees can sue the business for a variety of employment issues that can be covered under employment practices liability policy which can be included in a Management Liability/D&O policy (make sure to verify EPL is included and know our limits).