Privately owned organizations need D&O coverage just as much as public ones. The fact is that private companies experience just as many D&O claims as public companies that can come from regulatory enforcement, anti-trust lawsuits and shareholder involvement. And, let’s not forget to mention the list of third-party partners that can bring a claim against you personally or to your company.

There is also the probability of lawsuits triggered by poorly executed succession plans and business implementation.

A private company D&O policy protects your leadership’s personal assets and the organization if it goes into financial distress from vendor, supplier, and creditor lawsuits.

Let’s review the top three private company D&O liabilities:

Investment strategy/capital infusion

Actively investing in M&A activities can trigger a spike in shareholder involvement, leading to increased risks for board members. This is especially true in our current environment as loan rates are very reasonable. Private investment or equity funds are eager to bring in additional capital. All of this leads to potential audits and valuation procedures that pique the investor’s concern, making it necessary for the company and leadership to be protected.

Regulatory enforcement

Private middle market companies can face considerable scrutiny from regulatory bodies for poorly executed fiduciary responsibilities like late and improper filing for ACA requirements or OSHA compliance. And government intervention and investigations from the Employment Retirement Income Security Act (ERISA) can result in steep fines and penalties from the IRS.

Anti-trust litigation

Unfair trade practices and employee piracy have created unfair competition among businesses in many industries, markets and locations. As a privately owned firm you are susceptible to litigation and defense costs for anti-trust claims with excessive plaintiff’s fees.

Real Story:
Lack of business planning leads to a D&O claim against a private company’s board of directors


When the head of a private shipping supply manufacturer passed away unexpectedly, it was left to the board of directors to choose a successor. Unfortunately, the man they chose promptly drove the business into the ground. A relative of the original leader sued the board for negligence in business succession planning. The company’s D&O policy protected the board members and paid for their defense.

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