In the past three years, 44 percent of private companies have experienced a loss in the form of D&O liability, EPL, fiduciary liability, employee fraud, workplace violence or cyber liability, according to the Chubb 2013 Private Company Risk Survey. That’s almost half or all surveyed private companies, meaning that it can happen to anyone at any given time. If you don’t have the right management liability coverage, it will ultimately cost you in the long run. Don’t put yourself and your company at risk,;get covered and save yourself from a huge loss today. Here’s a quick look at what a directors & officers (D&O) claim can cost you.
What is D&O Litigation?
Nonprofits are especially susceptible to D&O exposures, even though D&O insurance is often considered for larger companies, according to Insurance Journal. When your company and its board members are targeted by litigation, then D&O insurance can help you out immensely. A policy will fund legal fees and indemnity payments for settlements or losses in court. Management liability insurance covers your company when you need it the most.
How Much Does it Cost?
A D&O claim is not cheap, unfortunately. Expect to spend anywhere from $35,000 to $100,000 minimum. The average indemnity payment for an adverse judgement reached $457,000. These kinds of costs can easily bankrupt a company, therefore it’s imperative to have some kind of protection from this type of litigation. In 2008, it cost a company who made less than 25 million a year at least $225,682, according to a survey cited by Inc.com, with some losses as high as $5 million. While it’s not impossible to pay for these types of settlements, it definitely helps to have coverage.
In addition to the monetary costs, there are also the secondary costs to think of. A large-scale suit against one of your business's leaders could be dismissed or settled out of court, but have lasting damage to your company's reputation, resulting in a loss of business over time.
About Axis Insurance
At Axis Insurance Services, we aim to help our customers identify their exposures and protect themselves. Founded in 1999, we offer insurance programs to a wide variety of professionals and industries including attorneys, real estate, healthcare, architects, and more, and also have a wholesale division. We pride ourselves on offering flexible insurance coverage tailored specifically to each customer’s needs. To learn more about our solutions, contact us at (201) 847-9175 to speak with one of our professionals.
