New Delhi, July 17 -- If you are a business owner or a startup founder you need to protect your company from unforeseen legal disputes. A company's top executives and key directors could be held accountable in a personal capacity when something goes wrong, and fighting such lawsuits may cost fortunes.

Entrepreneurs, particularly owners of small businesses and startup founders, will find it worthwhile buying a directors and officers (D&O) liability insurance policy.

A D&O policy protects a company and its key managerial people from unforeseen legal disputes. The insurance company will pay for the legal costs or the compensation or settlement amount, including penalties and fines.

But it's important to understand how D&O insurance works,...