DIRECTORS & OFFICERS INSURANCE

Protection for your founders, officers and board members.

 
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3 MIN

Directors & Officers Insurance with John

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What Directors & Officers  does & doesn't cover
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Recommendations based on stage and vertical
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Which add-ons make sense for your startup
BECAUSE

85% of D&O insurance underwriters believe D&O risk increased in 2021.

WHEN
  • Raising capital
  • Appointing a board member
  • Entering a highly litigious or regulated industry
  • Going public
WHY
  • Personal asset protection for directors and officers.
  • Attract and retain top talent.
  • Venture capitalists tend to expect D&O coverage as a way to protect themselves.
  • When going public, you’ll want coverage to protect as much of your activity as possible.
See recommended limits based on your stage and vertical
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THE PROTECTION

What Directors & Officers Insurance Covers

Side A
Assets of individual directors and officers, when the startup can’t indemnify the individual to cover costs related to a claim.
VOUCH EXCLUSIVE
Cap table disputes
If someone takes legal action against your company’s ownership percentages or equity distributions, Vouch’s policy can cover the costs of defense.
Side B
Reimbursements to the startup for covering a board member’s or officer’s claim-related costs.
VOUCH EXCLUSIVE
Intellectual Property (IP) protection
If someone alleges your product infringes patents, trademarks, or copyrights, and sues your leadership for it, Vouch’s policy can cover the costs of defense.
Side C
Defense costs/settlements for claims alleged against the Company for negligence or breach of duty.
Subpoena Assistance
Costs associated with harm caused by your product, including property damage or physical injury.
ADD ON
What it doesn’t cover
  • Damage to your business property or losses caused by your product: typically covered by a Business Owner’s Policy.
  • Claims that your professional work caused a financial loss: typically covered by Errors & Omissions insurance.
  • Employee injuries: typically covered by Workers’ Compensation.
  • Employee lawsuits: typically covered by Employment Practices Liability, Fiduciary, or Employee Benefits Liability insurance.
  • Data breaches: typically covered by Cyber insurance.

FROM THE ACTUARIES

Directors & Officers Claims Examples

Case Study
Incident
A VR startup launches a new product that allows their customers to create and furnish virtual rooms . A competitor files a lawsuit alleging that the technology used in the new product was actually developed by the startup’s CPO while he was working for the competitor.
Resolution
The D&O policy provides coverage for the cost of attorneys’ fees to defend the lawsuit.
Incident
An officer of a startup providing an HR platform received a subpoena from the SEC seeking information and documents related to the startup’s finances and customer lists.
Resolution
The D&O policy provides coverage for the cost of the startup’s attorneys’ fees incurred to respond to the subpoena.
Incident
A series C project management software startup hires their first COO from a larger competitor. A few months later, a lawsuit is filed against the startup and the newly appointed COO, alleging misappropriation of trade secrets.
Resolution
The D&O policy covers the cost of attorneys’ fees incurred to defend the lawsuit. The matter is settled after the startup is successful on an early motion to dismiss.
Alleged technology taken from competitor
Incident
A VR startup launches a new product that allows their customers to create and furnish virtual rooms . A competitor files a lawsuit alleging that the technology used in the new product was actually developed by the startup’s CPO while he was working for the competitor.
Resolution
The D&O policy provides coverage for the cost of attorneys’ fees to defend the lawsuit.
SEC seeking documents and information
Incident
An officer of a startup providing an HR platform received a subpoena from the SEC seeking information and documents related to the startup’s finances and customer lists.
Resolution
The D&O policy provides coverage for the cost of the startup’s attorneys’ fees incurred to respond to the subpoena.
COO misappropriation of trade secrets
Incident
A series C startup makes driverless vehicles for delivery services that operate on city streets and highways. On a busy Friday evening, a brake malfunction causes one of their vehicles to rearend multiple cars at traffic stops, causing significant property damage. A class action lawsuit is filed against the startup on behalf of the owners whose vehicles were damaged.
Resolution
The D&O policy covers the cost of attorneys’ fees incurred to defend the lawsuit. The matter is settled after the startup is successful on an early motion to dismiss.
INSURANCE 101

What Is Startup Business Insurance and Why Do I Need It?

In the fast-paced world of startups, having insurance in place can mean the difference between making the deal or getting passed over for a more prepared competitor.
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What Is Startup Business Insurance and Why Do I Need It?

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