When Investors Are Taken On (Directors and Officers Liability Insurance)
Insurance Considerations for Axe Throwing Venues
Some types of insurance are required by law or by contract, while many others are important simply because they protect a company from financial distress. Insurance reduces potential liabilities and increases enterprise value, which allows a company to continue to grow and thrive. Below is a common scenario your company will face and the insurance that may be important to buy at that time.
Before taking money from outside investors it is prudent for management to purchase Directors and Officers Insurance. Directors and Officers insurance protects against allegations of mismanagement and some regulatory proceedings (i.e if you take an investment from someone and they allege you mismanaged the company and want their investment back). Because you cannot buy the insurance retroactively it is important to put in place before soliciting investments.
*A corporate veil will not protect an owner from suits from directors and officers claim