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D&O Insurance

What is the Difference Between Private and Public D&O Insurance?

A D&O Insurance Policy is applicable to any registered company, public or private. In recent years, Indian businesses, mainly small businesses, have been focusing on availing D&O insurance for implementing better corporate risk management strategies. The popularity and demand for D&O insurance are steadily increasing among Indian businesses.

Applicable to both public and private companies

The scope of the insurance is applicable to both private and public Indian companies. A business owner does not need to worry about the category of the business. There are no hassles in availing of the insurance policy.

Discussing with the insurer

It should be a top priority to thoroughly discuss with the insurer the various features of the policy, before purchasing it. When you have clear ideas about the features of the D&O Policy, it becomes easier for you to buy it or recommend it to your company.

When you company is a public company

When you are an executive or owner of a public company, you need a D&O insurance policy that is applicable to the public companies. It is important to talk to the insurer about the scope of the policy in various cases.

When your company is a private company

If your business or company is private, then you require a D&O insurance policy that is applicable to private companies. It is essential to discuss the wide range of policy features with the insurer before you decide to buy it or recommend it to the management.

Knowing about the policy coverage

The policy document of the insurance will have details about the coverage of the policy. It is a huge priority to know about the coverage. Also, double-check the amount mentioned with the insurer. Remain clear with the coverage you expect to get for the company.

Knowing the differences between the public and private D&O

You should have clear ideas about the differences between the public and private D&O, if you are planning to purchase the policy or recommend it to your company. Once you are aware of the differences, it becomes simpler to choose a suitable insurance policy.

The policy document gives you fair ideas

You must deeply go through the different sections of the policy document to know the differences in the applicability of the D&O insurance policy when the company is public and when it is private. 

Aim for a well-defined insurance amount

As an executive interested in availing the insurance services, you should aim for a well-defined insurance amount for your company. Discuss the relevant issues with the insurer to gather more ideas. It helps in reaching a decisive conclusion. 

Remain clear about the tenure of the policy

You also need to be very clear regarding the tenure of the insurance policy, before you purchase it or recommend it to a particular business. The policy document will tell about the tenure. Also, ask the insurer about further details. 

Difference 1: Premiums are cheaper for private companies 

One of the main differences is a private company has to pay a lower amount of premium to the insurer compared to the premium amount that a public company pays when it avails the D&O Insurance Policy. The premium amount is clearly mentioned in the policy document. It differs in cases of both the categories. 

It is because there is most risk factor associated with a public company due to more corporate exposure in the industry. The chances of facing a lawsuit are more. Whereas the risk factor associated to a private company is not as much as a public entity. 

Difference 2: Retention is lesser for a private company

The second difference concerns the retention value of the insurance policy. The retention value of the insurance in case of a private company is lesser than the value in case of a public company. So, the private companies are at an advantageous position in this situation. 

Retention value is the financial mark above which the insurer bears the legal costs for the client. A public company is more exposed to corporate risks, compared to a private company. Thus, the retention value in its case is more. Talk to the insurer for more information.

Difference 3: Broader coverage for private firms

There is a wide range of scenarios in which the insurance is applicable. Accordingly, the insurer pays the costs to the insured. The number of such scenarios is more in case of a private company. The public company usually does not have such a broad coverage. 

There the three distinct sides of the insurance policy – sides A, B and C. Each side of the policy has unique features. The provisions of each of the sides have a broader scope of applicability when the company is private, compared to a public company.

Difference 4: Dynamics of covering the defence expenses

There is another major difference between the applicability of the policy under each category of business. The way the policy operates differs. 

When a private company needs the insurance to pay for the legal costs, the insurer usually directly pays to the attorney appointed by it. The payment is more straightforward. The attorney fights for the private company and gets his fees from the insurer. 

But, on the other hand, when the public company needs the insurance money, the insurer pays the fees to the attorney appointed by the company. The attorney, directly representing the public company and recruited by it, gets service fees from the insurer. 

It is better to discuss the various aspects of payment with the insurer to keep everything transparent. The insurer or the broker will be more than happy to explain you the various aspects of the insurance. 

Purchase a good corporate insurance policy

You can consult with PlanCover, an emerging insurance broker with goodwill in the Indian market in terms of selling top-rated, effective D&O policies to both private and public companies. The broker is reliable and certified by the concerned authorities. Get in touch with the experts to gather more comprehensive information about corporate insurance.

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