Goals of Private Company Directors and Officers Coverage

Goals of Private Company Directors and Officers Coverage

Last year, we published a post highlighting some of the reasons that Directors and Officers Insurance for private companies. Some of the reasons we cited were; providing financial protection from lawsuits due to bankruptcy, regulatory exposures, mergers and acquisitions, and new directors. These are not the only reasons it’s important for private companies to carry directors and officers coverage, however. D&O Insurance coverage serves various goals for privately held companies, even small ones.

One of the goals of private company directors and officers coverage is investment protection. While private companies don’t trade company shares publicly, they do have investors. These investors of course expect to turn a profit on the money they've invested. These days, new business enterprises have had a harder time getting off the ground, and if investors lose their seed money, they could very well seek reimbursement of damages from the company’s top executives; directors or officers.

Private company directors and officers insurance also aims to protect directors and officers against any claim of wrongdoing, even if unfounded. A claim of negligence or mismanagement still needs to be defended regardless of whether a mistake happened or not. The costs of defending against this type of claim can quickly add up, which could easily strain the resources of a private firm.

It’s important for your private company clients to remember that if they have a good deal of their own wealth tied up in their company, which they likely do, the cost of defending, settling, or being held liable of a claim has financial repercussions for not only them but also their spouse, family, and estate.

PL Risk Advisors provides comprehensive Private Company Directors and Officers Insurance Coverage. 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.