In order to play safe and keep their top executives, directors, and officers protected against litigation, most organizations invest in directors and officer’s liability (D&O) insurance. They want to safeguard their key decision-makers from lawsuits that may arise out of different scenarios. However, one thing that makes business owners feel worried about investing in a D&O policy is the claim settlement process. This process depends on several factors, including the chosen insurer and policy tenure to name a few.
If you’re a business owner, you should have bought D&O insurance for the directors in your organization. The thought of claim settlement can make you feel unsure especially on how long it might take for claims to get settled. In some cases, the claims do get rejected by the insurer, leaving the insured to deal with the loss.
A few simple precautions and proper understanding of what to keep in mind while raising a D&O insurance claim can help to avoid the possibility of claim rejection. Keep the following four steps in mind while applying for D&O policy claims:
Disclose Accurate Information
One of the most important factors that leads to a successful D&O claim settlement is the accuracy of information provided by the insured in the claim form. It is crucial for you to be honest while filling up this form and disclose all facts. You can mention the details of outstanding claims if any. Keep in mind that you enter into an insurance contract with a renowned insurer based on utmost good faith. By disclosing accurate information as per your knowledge, you can ensure smooth claim settlement and peace of mind.
Renew the Policy in Time
You’ve purchased a D&O policy to ensure that the directors and senior executives in your organization are adequately covered against professional liabilities. However, to get its full benefits, you must be regular with the insurance premium payments. It would be best if you never default on the premium payments. It will also help you to maintain the original retroactive date of your policy. Failing to do so may cause problems in the claim settlement process for the period before the retroactive date.
Apply for the Claim at the Earliest
While buying D&O insurance, the insurer would typically have told you about the specific time within which you need to register a claim. In general, you are advised to apply for the claim settlement as early as possible. You need to provide your contact details and policy numbers to the insurer to speed up the claim settlement process.
In case you have bought the policy through an insurance broker, you need to intimate them about the lawsuit. Their claim team will inform the insurer and get a surveyor appointed for claim administration. As required, you will be asked to submit the claim form with certain documents within a specific time limit.
Be Aware of the Exclusions related to Your Policy
It can be agonizing to realize that the insurance claim you filed for a lawsuit is not covered in the policy terms. In general, this happens because policyholders have not read the terms and conditions thoroughly while buying. They superficially read what is included in the policy terms, leaving the exclusions aside, which often leads to problems during the claim settlement process.
So, for you as a business owner, it is vital to know and understand all the inclusions and exclusions of the D&O policy you buy. It will avoid any confusion later.
These crucial precautions if followed at your end can result in hassle-free settlement of claims you might file for a professional liability insurance. Hence, you will get the financial support at the time you need it the most.