Officers and directors of corporate entities are often left with potential liability exposure unique to their position. When those risks crop up, the issue is a gray area of the law around indemnification, one that can undermine a policy and leave companies and their officers exposed in the event of a major incident. Owens Group provides protection for these individuals, with plans that are built to provide robust coverage and an approach to insurance that involves educating clients and helping them make better decisions about how to protect themselves and their companies.
Issues With Indemnification
The issue at hand is that of presumptive indemnification, which can expose directors and officers to personal liability if they are not indemnified by the company to the fullest extent provided for by law. The presumption in most policies covering key operators is that the company will indemnify the people in these roles, and if it does not fully do so, there’s a retention clause that forces the policyholder to pay up a larger retainer, which functions essentially like a deductible. This helps ensure they will indemnify those operators by making the policy less valuable if they do not. It can be a powerful tool to keep companies from scapegoating a member of the board when something goes wrong, but it does need to be handled correctly to work as intended, which is why it matters who you choose when setting up a policy.