Do privately-held companies need D&O insurance?
Due to the ownership structure of most private venture backed companies, the risk for securities litigation is reduced substantially. As such, D&O rates for private firms are roughly one fifth the cost of their public counterparts. The largest areas of securities-based risk may be in merger-related activities and stock repurchases from founders or key executives. Additionally, employment practices-related litigation (EPL) now represents over 25% of all lawsuits against directors and officers. For many rapid growth companies, strong human resources practices and procedures may not yet be in place, which can increase the probability of litigation. Other areas of litigation may include intellectual property disputes, particularly if your industry has key technical employees moving between competitors. This type of litigation frequently names the directors or officers in recruiting the individual and soliciting trade secrets. Today, D&O policies can be structured to provide protection agai
