{"id":1246,"date":"2019-04-08T16:29:22","date_gmt":"2019-04-08T16:29:22","guid":{"rendered":"https:\/\/www.insurancebee.com\/blog\/?p=1246"},"modified":"2023-02-08T10:03:39","modified_gmt":"2023-02-08T10:03:39","slug":"do-start-ups-need-directors-and-officers-insurance","status":"publish","type":"post","link":"https:\/\/www.insurancebee.com\/blog\/do-start-ups-need-directors-and-officers-insurance","title":{"rendered":"Do start-ups need directors’ and officers’ insurance?"},"content":{"rendered":"
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\"Do<\/figure>\n<\/div>\n\n\n

<\/p>\n\n\n\n

In a word, yes.<\/p>\n\n\n\n

Every\nbusiness owner needs a D&O policy. It should be top of your insurance-to-get\nlist.  <\/p>\n\n\n\n

Directors\u2019 and officers\u2019 liability insurance<\/a> might seem unnecessary right now. I mean, you probably don\u2019t even have a boardroom table, let alone a bunch of directors sitting round it.<\/p>\n\n\n\n

But\nthe thing is, the risks\nof running a business<\/a> start from day one.<\/p>\n\n\n\n

And while there are other insurance policies you\u2019ll want to get, like general liability<\/a>, or errors and omissions<\/a>, they only protect the corporate organization. Not the individuals running it.<\/p>\n\n\n\n

Ok,\nso maybe right now that\u2019s just you. And your business partner, if you have one.<\/p>\n\n\n\n

But you still need the kind of protection you\u2019ll get from D&O insurance. <\/p>\n\n\n\n

<\/p>\n\n\n\n

What is directors\u2019 and officers\u2019 insurance? <\/strong><\/h2>\n\n\n\n

It\u2019s\non-the-job coverage for company bosses. It protects their personal assets if\nthey\u2019re sued. <\/p>\n\n\n\n

Because\nin the eyes of the law, company leaders are personally<\/em> liable for\ndecisions they make on the firm\u2019s behalf. <\/p>\n\n\n\n

So,\nif someone thinks you, or one of your directors, has done something wrong, they\ncan sue the individual concerned.<\/p>\n\n\n\n

And\nthat someone can be anyone. It could be an angry investor, claiming their\nmoney\u2019s been mismanaged. An ex-employee claiming unfair dismissal. It could\neven be a competitor. <\/p>\n\n\n\n

To\nmake things worse, ignorance is no excuse. You can be slapped with a suit even\nif you unknowingly did something wrong. <\/p>\n\n\n\n

Lawsuits\ndon\u2019t come cheap. Nowadays they can run to six, sometimes seven figures.\nHowever deep your pockets are, that\u2019s a lot of dollar to find yourself.  <\/p>\n\n\n\n

If\nyou\u2019ve got directors\u2019 and officers\u2019 insurance you won\u2019t have to. A D&O\npolicy can pick up the tab. <\/p>\n\n\n\n

Even if the claim\u2019s groundless. It\u2019ll get you an attorney in court and pay for your defense. Then, if you\u2019re found liable, it\u2019ll pay your fine and take care of the damages. <\/p>\n\n\n\n

<\/p>\n\n\n\n

What does D&O cover?<\/strong><\/h2>\n\n\n\n

It varies from policy to policy. But as a general\nrule, D&O protects you, your business, and your personal assets from claims\nof wrongdoing. <\/p>\n\n\n\n

\u2018Wrongdoing\u2019 includes:<\/p>\n\n\n\n