Directors and Officers Insurance
Directors and Officers (D&O) Insurance protects companies and their directors and officers from claims filed in response to the actions of directors and officers at the company when acting in the capacity of a director or officer. There are many applications to D&O insurance including breach of fiduciary duty, failure to comply with laws and regulations, securities fraud, and breach of contract.
D&O covers executives at a company, including board members. It can also be extended to cover company lawyers and external advisors. This insurance covers that cost of litigation and settlement brought against directors and officers. It can include lawsuits from customers, vendors, company shareholders, regulatory agency investigations, and criminal prosecutions.
The cost of the average D&O lawsuit is close to $1 million. This can be a fatal blow to many companies not covered with D&O insurance. As a growing company, if you are looking for funding it is often required that you carry D&O by your investors.