Directors And Officers Liability

The word 'liability' is today almost considered an obscenity, really. After all, who wants a millstone around their neck? In the insurance industry, directors and officers liability merely refers to the obligation that a company has to compensate an injured party or parties for the actions off a director or officer employed by that company.

Businesses from Miami to the UK purchase liability insurance for a wide variety of reasons and coverages. Directors liability simply means that the company has agreed to provide coverage in the event that there is an action in which the director or directors of the company can be held liable.

Even those working in the field of massage therapy need liability insurance. What sort of protection does the therapist have if, for example, a client falls off the massage table in mid-session and is injured? A liability policy should cover such instances.

A contractor should carry a liability policy in addition to the already mandatory workers compensation coverage; as anyone working in the construction industry today can tell you, accidents do unfortunately happen. A liability policy has limits as to the dollar amount the company is required to pay in the event of injury or death.

Be sure to read any liability policy very carefully. It may appear at first glance that your policy covers all possible contingencies, when in fact it is designed to do just the opposite. Insurance companies do not like to pay on a claim unless there is no other choice. They will, of course, pay out eventually - but only after exhausting all possible interpretations of the policy.

To be absolutely fair, it is good that not all claims are considered equal; this tends to limit the frivolous, nonsense claims. For example, a pedestrian (who can read and write English very well) has ignored warning signs and decided to walk over an open manhole cover - and then proceeds to sue the company working in the manhole. This would be classed as a frivolous lawsuit and most likely dismissed out of hand.

In any industry, whether it is construction, medicine or just business in general, it is a wise investment in the safety and security of the company's future to have directors and officers liability insurance. It is a responsible discharge of the company's fiduciary duty to its stockholders and officers.