Louisiana startups rarely start with a list of business insurance they will need to be successful. Instead, they generally begin with a big idea and way to fulfill a need in the market.
One type of insurance protects the organization as it is under development as well as the people with the big ideas. D&O coverage can help protect the minds behind the organization's development.
What is D&O Insurance?
Directors and Officers liability insurance, also known as D&O insurance, covers risks associated with those in charge of a company. They could make mistakes that lead to civil action, criminal or regulatory investigation or trials. D&O insurance can help you get the coverage you need for these risks.
However, D&O insurance does not cover intentional wrongdoing. It will not help a CEO who is laundering money nor will it help directors who are breaking the law.
Why Does a Startup Need D&O Insurance?
Most startups begin with a new and necessary idea. Once the idea becomes a product or service, it is common for people who have had similar ideas to begin claiming theft of intellectual capital. Successful startups are especially prone to accusations of theft. Even if the company has a patent or trademark, they will still need the help of an attorney during any legal action.
Startups are also more likely to unintentionally infringe on regulatory laws. Regulated businesses such as transportation or communication are rife with laws and regulations. These guidelines govern who can enter the market and what they can do once they are there. Even startup companies that do their homework are targets for costly regulatory investigation. D&O policies help reimburse any legal fees incurred during such investigations.
In their infancy, most businesses are not flush with startup capital. Some sacrifice comfortable offices for their marketing budget. Others operate with a lean, "bare bones" approach until they begin to bring in money.
Purchasing a D&O policy may seem like an unnecessary business insurance expense when every penny matters. Yet, insurance is about mitigating risk. When faced with criminal, civil or regulatory legal battles, D&O insurance protects a startup's valuable capital. It can make the difference between a business closing or flourishing in its early days.
Even though it is possible to for a startup to go without a D&O business insurance policy, it is an unacceptable risk.
We've got you covered. Call McInnis Insurance Services, Inc. at 844.926.0860 for assistance choosing a great business insurance policy.