Issue link: https://htpgraphics.uberflip.com/i/246991
Insurance Section 8 A company may take out insurance to protect itself against the financial consequences of loss of or damage to assets employed or liabilities incurred in the course of business. The insurance arrangements of a new company will frequently be driven by Investors, who may insist that appropriate insurance arrangements are put in place as a precondition of their investment. Some types of insurance, ie employers' liability and third party motor liability, are compulsory. Other types, such as public and product liability or material damage, may also be required. Any company should, at an early stage, compile an inventory of its assets and potential areas of exposure to liability and obtain professional advice as to the appropriate level of insurance protection required. "Keyman" insurance "Keyman" insurance is available to cover the costs of incapacity, illness or death of prime movers in the spin-out, such as the chief executive or a key researcher, as these individuals are very important to the company, especially when it is young. Normally Venture Capitalists will insist that the spin-out obtains this insurance. Directors' and Officers' insurance Of particular interest to directors of any spin-out company is Directors' and Officers' insurance, often referred to as "D&O cover". This is designed to protect directors and officers of a company from loss resulting from claims made against them in relation to their duties as directors or officers. A standard policy usually provides cover for companies for amounts, which the company pays in indemnifying its directors and officers in such situations. It also provides cover directly to individual directors and officers for losses which they incur as a result of claims made against them and in respect of which the company does not indemnify them. Insurance will not cover criminal liability. Any Directors' and Officers' policy needs very careful scrutiny before it is taken out, to ensure that it provides adequate protection against the risks to which the company's directors and officers are exposed. 45