Directors and Officers Insurance, or D&O, protects the personal assets of Directors & Officers, as well as spouses. This policy comes into play when a company faces a lawsuit from an employee, vendor, or another outside party personally sues for alleged wrongful acts or decisions made within a company.

D&O Insurance protects personal assets of leadership and your investors against claims of mismanagementof the business.

You will need D&O when you have a Board of Directors or other committee or advisory board. Many investment companies will require D&O to be purchased within your funding agreement. If you have investors in your business, it is highly suggested that you review your agreements to determine if D&O is required.

If you don’t carry the appropriate D&O coverage, you could risk losing your company and paying damages from your personal assets. Additionally, you could face additional financial penalties resulting from lawsuits against you from your shareholders.

Each year you should review your D&O policy to ensure that your coverage limits are up to the correct amount. If you are in the process of raising capital or have recently raised capital, a review of your coverage is an important piece of getting ready and protecting yourself.