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D&O Insurance

3 Benefits of D&O insurance for Trustees in India

By March 2, 2022April 13th, 2022No Comments

D&O insurance is a way to minimize risk for the corporate houses and NGOs. Business, both public and private, can avail the benefits of the insurance policy, reducing the risk of bearing the costs of financial liabilities. The insurance is meant to provide coverage to directors/officers of the company. There are benefits for the trustees, too.

Who is a trustee?

A trustee is an individual who has the power/right to manage a wide range of financial activities on behalf of a company or an NGO. The trustee or group of trustees manage the taxes and oversee other financial operations under the name of the entity.

Can a company have trustee?

Yes, a company can have a trustee. It is not a mandatory aspect of setting or running the operations of a company. But, in many cases, in India, a company, especially a small business, has a trustee.

Can an NGO have a trustee?

You might wonder whether an NGO can have a trustee or not. The answer is again – YES, like the previous section. An NGO can have a trustee and in most cases, the registered NGOs in India have trustees, according to their documents.

Inclusion of trustees

A standard D&O insurance policy of a reliable service provider includes trustees in the list of beneficiaries, on the basis of certain terms and conditions. It is rational to check out the inclusion of one intends to buy the policy specifically to benefit the trustees of an organization. 

Checking out the applicability of the insurance 

When you shoulder the responsibility of recommending the policy to a company or an NGO for their trustees, it is your priority to check out the particular applicability of the D&O insurance policy. Enquire relevant details from the insurer that offers the policy.

The insurer should be renowned

It is important that the insurer should have significant goodwill in the competitive market. It is better to check out the online reviews of the insurer before finally deciding to purchase the D&O policy. The reviews give comprehensive ideas about the service quality of the insurer.

There should be certification from IRDAI

A very crucial factor to focus on is checking whether there is certification from IRDAI. The insurer should have the required certification. The service provider can also be a reliable insurance broker. Choosing the service provider is totally the discretion of the buyer.

Knowing about the coverage from the very beginning

It is extremely important to know about the coverage of the D&O insurance policy from the very beginning. There should not be any doubts at any stage. The document of the insurance policy clearly mentions about the coverage. Still, it is wise to ask about it from the insurer and the conditions attached to the coverage.

The premium to be paid

The premium amount varies according to the coverage that the trustees need. The management needs to decide on this after some brainstorming sessions. When there is consensus, a forward step is taken.

The major benefit of the D&O insurance policy for the trustees is covering the legal expenses in situations when they have to counter a lawsuit. When faced by a lawsuit, the trustees have to hire an experienced attorney to fight the case. There are high service fees to be covered.

A disgruntled customer or unsatisfied shareholder can file the case. A third party vendor can also file it. The D&O insurance policy plays a huge role in taking care of the legal and related costs. The insured does not have to worry about the expenses. 

Benefit 2: Protecting the assets of the trustees

Another crucial benefit of the D&O insurance policy is it is effective in protecting the assets of the trustees. There can be cases when the company becomes insolvent and unable to pay the legal costs for the trustees. In such situations, they have to dig through their assets to spend on hiring better attorneys and fight the lawsuit.

But, when the trustees have a D&O insurance policy under their names, they do not have to remain bothered. There is no need to remain concerned about personal assets. The insurance protects the assets, as it pays the legal expenses beyond indemnification. 

Benefit 3: Protecting the assets of the organization of the trustees

The D&O insurance policy of a top-rated service provider is also very effective in shielding the assets of the organization of the trustees. The organization does not have to worry about spending their assets to fight the lawsuit. 

The provisions in the D&O insurance policy make it possible to cover the costs where the assets of the organization remain safe. The policy creates a safety net on behalf of the organization, too, in case of a lawsuit. 

Go through the clauses of the policy

When you need to recommend the policy to the trustees of a company, it is essential to read the clauses of the insurance. You should have clear ideas about the scope of the D&O policy that the trustees need to buy to avail the required benefits, especially in the long run. 

Checking out the conditions when it is not applicable

It is also quite important to note that when the insurance is not applicable. So, a thorough reading of the terms and conditions of the D&O insurance policy is very important to get the details on this matter. 

Do not hesitate to ask questions to the insurer

You may have some doubts about the applicability or non-applicability of the insurance policy. It should be your priority to ask relevant questions to the insurer or to the insurance broker. Get clear answers from the service provider and then proceed to recommend the policy to the concerned organization.

Get valuable information from a top insurance broker

PlanCover has good reputation in the Indian market as an insurance broker. You can consult with the agency to know a wide range of features of the D&O insurance policy meant for the trustees. 

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