errors and omissions insurance Family Run Businesses Also Need D&O Insurance | Axis Error & Omission
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Family Run Businesses Also Need D&O Insurance


You may think you’re a family owned business, and don’t require Directors & Officers (D&O) Liability insurance, but that’s not the case. Directors, officers, and executives at family run businesses have similar exposures that public and other private firms do in addition to some unique risks.

For example, you may make decisions, implement strategies that are questioned by another family member, or years later when another generation takes over, those shareholders may question decisions made in the past that they felt were not in the best interest of everyone. You, your company and directors of your company can also face claims from employees, competitors, suppliers, and clients.

What’s more, many family businesses are also not that vigilant about having board meetings or don’t give much thought into who is sitting on that board. Other family members, friends, themselves and/or their management sit on their boards. But it’s essential to identify and select outsiders to sit on your board, as they can help to manage the company’s business’ affairs, subject to any limits imposed in the company’s articles of organization, by-laws, operating agreement or shareholders’ agreement (formation documents). A board with outside members or non-family members can help mitigate bad decisions that result in D&O claims.

We’re all human – regardless of whether we have a company run by family members or not, and lawsuits abound every day: everything from breach of duty to unfair business practices. Directors and officers walk on a tightrope, making decisions involving complex transactions and based upon diverse and sometimes unclear information. Despite the best business judgment, qualifications and experience, directors and officers are still personally exposed to litigation that may allege a failure to perform their management role. Which is why D&O insurance is a must.

At Axis Insurance Services we can provide you with further insight into your D&O needs and the coverage that is available. Just give us a call at: (877) 787-5258.

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Blogged on: February 14, 2012 by Mike Smith
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