When Should I Buy D&O Insurance?

D&O Insurance is a key factor when raising capital from venture capital firms. It’s also the first step in commercial insurance and risk management for companies raising capital. 

When Should I Buy D&O Insurance?

D&O Insurance should be purchased as soon as your business raises capital, is taken on by a venture capital firm, or has established a board of directors. Buying Directors and Officers Insurance for your business is something that can and should be done at any stage of growth.

Seed Round

It’s never too early to purchase D&O coverage. Directors and Officers Insurance is about more than protecting your board members, it’s about protecting your business from liability risks that can be associated with things like mergers, acquisitions or raising funds through an online platform. D&O is also something that can attract investors, providing them with protection, proof of stability and promise of growth. Read more about what CEOs and CFOs need to know about D&O insurance for startups.

Series A

At this stage you are most likely targeting venture capital firms when it comes to raising capital, and if you don’t already have a board of directors, you will soon. Directors and Officers Insurance is often a requirement for some venture capital firms and board members. So at this stage D&O Insurance should be a high priority. Here’s why Venture Capital Firms look for D&O insurance.

Series B+

As stated earlier, it’s never too early to purchase D&O coverage, but it can be too late. If you don’t have D&O Insurance by this stage of growth you’re putting your board members, investors and overall business at risk of liability exposures. 

Here are just a few examples of the types of incidents covered by D&O insurance:

• Lawsuits by your employees or dismissal, breach of contract, discrimination, harassment, etc.
• Prosecution of partners and shareholders for mismanagement and for not having taken the right decisions in the management of the company.
• Claims from creditors and suppliers for defaults, violation of commercial agreements, etc.

Protection is key when it comes to growing your business, and at HRO we want to help you ignite your business. Learn the Basics of D&O, or contact an expert at HRO Resources and get started with a quote today.