You may not be aware that the private company Directors and Officers litigation environment is very different from the public environment, in that lawsuit settlements are typically smaller for private entities. However, the opportunity for a suit is still there. Here are just a few examples of why private companies would need Directors and Officers Insurance.
Bankruptcy: Directors and Officers Insurance is the only thing that stands between creditor lawsuits and the personal assets of your private company.
Regulatory Exposures: Private companies are subject to government regulation as well as government enforcement of regulations. Paying the cost of an attorney to defend an officer against a government enforcement action is an expensive proposition that could cause significant financial damage for your business.
Mergers and Acquisitions: If for any reason your company needs to pursue a merger, it’s wise to purchase Directors and Officers Insurance. Current officers will want to be covered financially in the case that they are sued after the deal closes, but the acquiring company might not be willing to insure the company themselves.
New Directors: Private companies that wish to attract new independent board members can use the purchase of Directors and Officers Insurance to make the board seat that much more attractive.
Emerging Risks: Acquiring Directors and Officers Insurance may help your private company respond to newly emerging risks.
Venture Capital Requirements: Some venture capital firms simply require that their portfolio companies purchase Directors and Officers Insurance as a condition of their investment.
PL Risk Advisors provides Directors and Officers Insurance specifically designed for the exposures faced by private companies. We are a leading wholesale insurance brokerage covering the professional liability market. Our team of seasoned professionals has the depth and breadth of knowledge to help our agency partners secure the best quality coverage for their clients. Contact us today for more information at (855) 403-5982.
