As technology companies continue to develop and expand, mitigating foreseeable risks for continued growth is essential. From tech startups with tight budgets to private venture capital (VC) backed technology firms, growing technology companies need insurance to protect them. Potential risks include accidents, cyber-attacks, and business disruption due to extreme weather and other unforeseen events.

Given that technology firms often deal with various third parties, including, but not limited to, investors, competitors, and shareholders, one of the most important risks to safeguard against is allegations of wrongful acts on the part of the company’s decision makers.

At Doeren Mayhew Insurance Group, we understand how important it is to protect the personal assets of your tech company’s leadership team. That’s why we provide customized Directors’ & Officers’ Liability Insurance (D&O) for technology companies. Even the most honorable tech leaders may be accused of misrepresentation, theft of intellectual property, breach of fiduciary duty, and more. Defense costs are extremely expensive, so securing D&O insurance delivers peace of mind ahead of any potential claim scenarios.

What is D&O Insurance?

D&O Insurance policies help protect a company’s directors, officers, and other leaders from personal losses if they are sued for failing to fulfill their role. Coverage also extends to legal and other fees required to provide a defense against any allegations. There are three types of D&O Liability insurance: Side A, Side B, and Side C.

  • Side A Coverage covers individual directors and officers in scenarios where they aren’t indemnified by the company. This shields them from personal liability due to alleged wrongful acts while carrying out official duties, protecting their personal assets.
  • Side B Coverage provides companies with coverage for indemnification payments made to directors and officers for covered claims. This reimburses the company for expenses related to legal fees, settlements, or judgements resulting from indemnification.
  • Side C Coverage shields companies against securities-related claims, like shareholder lawsuits alleging misinformation or nondisclosure in securities offerings. Also known as “entity coverage,” this is specifically tailored to securities claims and large, public entities in order to protect the company’s interests.

There are related issues that D&O policies do not cover, including illegal acts or profits, bodily injury, property damage, fraud, and more.

Common D&O Risks & Claims

  • Employment malpractice
  • Reporting errors
  • Inaccurate disclosures
  • Insolvencies
  • Regulation violations
  • Breach of fiduciary duty
  • Failure to comply with workplace laws
  • Theft of intellectual property
  • Misrepresentation of company assets
  • Discrimination
  • Harassment
  • Wrongful termination
  • Slander, libel, and copyright infringement
  • Securities fraud

Why is D&O Insurance Important to Technology Companies?

Company leaders across industries may face claims of wrongdoing at some point in their careers. For technology companies, funding is valuable to sustain expansion and growth, so it’s imperative to secure protection against personal losses. D&O insurance coverage also helps demonstrate to potential investors and board members that you are a credible organization that understands the importance of protecting your individual and company assets.

How Much D&O Coverage Should Tech Companies Get?

When purchasing D&O insurance, you should consult a trusted business insurance advisor with experience in the D&O insurance marketplace. They will help you design your initial D&O strategy and benchmark coverage needs based on cost factors such as perceived risks, length of time in business, financial background, company size, claims history, and budget. They can also assist with a risk management strategy to complement your insurance coverage.

How We Can Help

At Doeren Mayhew Insurance Group, we have more than 130 years of experience assisting our clients in protecting their assets and minimizing liability risk. If you are part of the leadership team at a growing technology company, it’s never been more essential to secure D&O insurance. Our dedicated group of trusted insurance advisors understands the nuances of securing a quality D&O policy that can save your tech company time and money. Contact us to schedule a consultation with one of our D&O insurance agents to review your unique coverage needs.