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Director’s & Officers (D&O) insurance evalulation

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Service Description

Objective:

To determine the appropriate coverage amount, premium, and policy details for a Directors & Officers (D&O) insurance for a start-up or scale-up, ensuring that company leadership and board members are protected from personal losses if they are sued as a result of serving the company.

1. Understanding the Need:

  • Company Profile:
  • Nature of the business
  • Size (number of employees, revenue)
  • Geographic presence (single/multi-location, international operations)
  • Business model and structure (e.g., private vs. public, parent vs. subsidiary)
  • Potential Risks:
  • Type of industry and associated legal risks
  • Past litigations or issues, if any
  • The regulatory environment in the industry
  • Potential conflicts of interest

2. Determining Coverage Needs:

  • Coverage Amount:
  • Evaluate the potential financial impact of legal actions against the directors or officers.
  • Consider the company’s size, assets, and potential legal fees.
  • Policy Features:
  • Defense costs: Will it be within the limit of liability or in addition to the limit?
  • Policy exclusions: What is not covered?
  • Retentions/deductibles: Out-of-pocket amounts before insurance kicks in.
  • Claims-made vs. occurrence basis: When a claim is covered based on when it’s made or when the incident occurred.

3. Comparing Providers:

  • Reputation & Financial Stability:
  • Review ratings from insurance rating agencies.
  • Policy Terms:
  • Review the terms, conditions, and exclusions of different providers.
  • Premium Costs:
  • Compare premium amounts and payment plans.
  • Claim Handling:
  • Understand the insurer’s process for handling claims.
  • Check reviews or references on their responsiveness and fairness.

4. Policy Implementation:

  • Engage Legal Counsel:
  • Review the final policy document with legal counsel to ensure understanding and appropriateness.
  • Educate the Leadership Team:
  • Ensure that all directors and officers understand the scope, limitations, and processes associated with the D&O insurance.
  • Regular Review:
  • Schedule periodic reviews (at least annually) to reassess coverage needs as the company grows and evolves.

5. Claims Management:

  • Immediate Notification:Inform the insurer immediately upon becoming aware of a potential claim.
  • Documentation:Maintain thorough records of any incidents or actions that could lead to a claim.
  • Cooperation:Collaborate closely with the insurer during the claim process, providing all necessary information and following their guidance.

Out-of-scope: the actual closing of the insurance is out of scope.