D&O insurance protects the personal assets of your board members and executives when they are sued for decisions made while managing the company — and it protects the company itself when it must indemnify them.
D&O insurance covers claims alleging wrongful acts — misstatements, breach of duty, neglect, or errors in judgment — by directors and officers in their managerial capacity. It pays legal defense costs, settlements, and judgments that the company or the individuals would otherwise pay personally.
Side A — Direct Protection
Pays the personal liability of directors and officers when the company cannot indemnify them (e.g., insolvency or legal prohibition).
Side B — Company Reimbursement
Reimburses the company when it indemnifies directors and officers for covered claims, protecting your balance sheet.
Side C — Entity Coverage
Protects the company itself when it is named alongside directors and officers in securities or other covered claims.
Legal Defense Costs
Pays attorney fees, court costs, and investigation expenses — often the largest cost of a D&O claim, even when no wrongdoing occurred.
Employment Practices Claims
Many D&O policies include or offer employment practices liability as part of management liability package.
Investigation & Subpoena Costs
Covers costs of responding to regulatory investigations, subpoenas, and formal proceedings involving directors or officers.
Any organization with a board of directors, outside investors, or executives making decisions on behalf of stakeholders should consider D&O coverage. It is often a requirement for attracting and retaining qualified board members.