Many private companies believe that since they are family owned, they do not need to carry Directors and Officers Liability Insurance. They may mistakenly believe that the only type of lawsuits that are brought under a Directors and Officers policy are shareholder suits. Insurance industry statistics do not bear this out. Private companies, like their public counterparts, are under an ever-present possibility of claims from a variety of sources. Directors and Officers for private companies affords broad coverage that can insulate your business from bankruptcy in the event of serious claims.
Common Types of Claims Brought Against Private Companies
- Employment practices claims
- Shareholder claims
- Creditor claims
- Trustee claims
- Customer claims
According to the Insurance Information Institute, a Directors and Officers Liability Survey conducted in 2013 indicated that 33 percent of all claims were shareholder actions and 31 percent were claims related to employment practices. Another 20 percent of the claims were for fiduciary obligations. Additionally, 27 percent of the private companies interviewed reported having been presented with a claim in the past 10 years.
Coverages Afforded Under Directors and Officers for Private Companies
Your Directors and Officers Liability insurance can protect your company, board of directors, and officers from liability claims brought by third parties for alleged acts, omissions, and misrepresentation or misstatements. By working with a licensed insurance agency that specializes in this area of insurance, you will be able to find the best policy for your company and protect your family’s assets.