When private companies think about risk, their minds usually go to the obvious: property damage, employee injuries, or maybe even cyberattacks. But there’s another category of risk that catches many business owners off guard: Directors and Officers (D&O) liability.
A common misconception is that D&O insurance is only for large, public corporations. In reality, this line of coverage is just as critical—arguably more so—for private companies that are actively growing, attracting investors, acquiring talent, or preparing for a future transaction.
“A big misconception is that D&O is only for public companies. I often see private companies that are closely held believe they have no exposure.”
But in today’s increasingly litigious and competitive business climate, exposure is everywhere—whether you’re a lean, fast-moving startup or a third-generation family business. D&O isn’t about insuring bad actors. It’s about protecting good leaders from expensive, distracting, and potentially devastating legal challenges.
We at DOXA believe D&O insurance can actually enhance a company’s valuation story. It signals good governance, protects leadership, and supports long-term resilience. In short, it’s a smart bet.
Private Companies Get Sued, Too—Even When They Operate Ethically
One of the most dangerous myths in business is that doing the right thing protects you from lawsuits. The unfortunate truth? Allegations alone can spark a legal battle.
“Companies believe they won’t be sued because they conduct business ethically and feel as though they aren’t doing anything wrong. This isn’t necessarily the case, because D&O covers allegations, whether true or completely false.”
Legal costs rack up fast—even when you win. Private companies can be hit with lawsuits from:
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Shareholders accusing leadership of mismanagement or lack of transparency
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Competitors alleging intellectual property infringement or unfair trade practices
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Vendors or customers filing claims for breach of contract
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Employees initiating claims after contentious departures or internal disputes
Innovative sectors—like tech, life sciences, and financial services—are particularly vulnerable. A cyber event that leads to data loss could even morph into a D&O claim if stakeholders allege poor oversight or mismanagement.
“Obviously, a company would think about Cyber coverage for an incident, but not necessarily a D&O policy.”
This overlap in risks is critical. As the regulatory and digital landscapes evolve, the lines between liability categories are blurring. Companies without D&O coverage may think they’re covered—until they realize, too late, that they aren’t.
Learn the Smart Way—Not the Hard Way
Often, private companies don’t think about D&O until they’re staring down a lawsuit. By then, it’s too late to transfer the risk.
“It was a long, complex claim that was expensive to defend. Without D&O, the company would have ceased to exist.”
That case—a dispute between a startup founder and a lead inventor—is a sobering example. Despite no wrongdoing, the legal fees were crushing. With a proper D&O policy in place, however, the business survived.
This isn’t a rare exception. At DOXA, we’ve seen time and again how businesses of all sizes face leadership-related litigation. These aren’t bad businesses—they’re good businesses caught in the crosshairs of a conflict they didn’t anticipate.
That’s why timing matters. The best time to invest in D&O coverage is before you need it.
“Another misconception is that D&O is too expensive. With the market in a soft condition right now, D&O is very reasonably priced.”
Today’s market offers favorable pricing, flexible options, and underwriters who understand the evolving risks private companies face. For M&A-minded owners, this is a golden opportunity to strengthen your protection and your exit-readiness.
For Founders, CEOs, and CFOs: D&O Protects You
Here’s the bottom line: D&O insurance isn’t just about protecting the company—it’s also about protecting you. Directors and officers can be held personally liable for their decisions. Without D&O coverage, their personal assets could be at stake.
“D&O coverage ensures their personal assets aren’t at stake. It also protects the company’s balance sheet, which can be just as critical.”
That message resonates in boardrooms, especially among potential investors and future acquirers. If you’re raising capital, D&O coverage is more than a checkbox—it’s a requirement.
It tells the market: We take governance seriously. We protect our people. We’re prepared for growth.
Selling D&O Coverage the Right Way
Insurance agents play a crucial role in helping private company leaders understand the importance of D&O. The key is clarity and empathy—framing the value of D&O in terms that matter to the client’s specific concerns.
Start with these three truths:
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Allegations are enough – Even unfounded claims cost money and time to fight.
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Personal liability is real – Leaders’ homes, savings, and reputations could be on the line.
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It builds credibility – Investors and board candidates often require D&O as table stakes.
But that’s only half the job. The other half is selecting the right policy. Not all D&O policies are created equal, and nuance matters when claims hit.
Key features to look for:
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Additional Side A and Defense Cost limits
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100% Defense Cost allocation
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No antitrust exclusion
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Non-voidable policy language
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“For” wording in exclusions (e.g., “for actual fraud” rather than “arising out of”)
When you combine the right narrative with the right product, you’re doing more than selling a policy—you’re creating trust. That’s what great agents do. And that’s how private companies grow with confidence.
D&O and M&A: A Hidden Driver of Deal Value
At DOXA, we work with insurance brokers and M&A advisors across industries. One trend is clear: buyers are becoming more selective. Governance, legal history, and leadership risk are now front-line due diligence issues.
When a private company lacks D&O coverage, buyers ask:
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What skeletons are in the closet?
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Is leadership exposed?
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How will we inherit or defend these risks?
On the other hand, when D&O coverage is in place and thoughtfully structured, it sends a powerful message of operational maturity.
“D&O insurance isn’t just about protecting the leadership team. It’s about protecting the balance sheet of the company itself.”
It’s protection now—and value later. Whether your client plans to exit next year or build for the next generation, D&O supports that strategy.
Final Take: Don’t Wait for the Lawsuit
Private businesses often believe that litigation is for the Fortune 500. But reality doesn’t discriminate. Allegations happen. Disputes arise. And without a D&O safety net, even the most well-run companies can find themselves in crisis.
The good news? D&O is available, affordable, and increasingly essential. The smart move is to act now—before the allegation, before the dispute, before the market hardens.
At DOXA, our Professional Lines experts collaborate with agents and advisors to place D&O policies that match each client’s risk, stage, and goals. If you’re an insurance professional, we’re here to support your placements. If you’re a business owner, we’ll help you sleep better at night.
Let’s connect—because protecting your leadership means protecting your future.
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