Directors & Officers (D&O) Liability ​

Directors and officers liability insurance provides coverage for specific risks of directors, officers, and other high-ranking executive professionals. D&O Insurance pays for claims arising from; release of information deemed confidential, poor investments made by the officer, unlawful acts, firing and hiring issues, conflicts of interest, and gross negligence.  Claims of this nature are being seen in businesses with increasing frequency.

What does a D&O Insurance Policy Cover?

D&O insurance will cover damages and legal expenses that are the result of managerial actions or decisions resulting in financial loss. Unfortunately, those who serve as officers and directors can be held personally liable for the resulting damages if this coverage isn’t in place. A Directors and Officers liability insurance policy can help you attract and maintain qualified executives and board members.

D&O Liability policies have two sides:

  • Directors and Officers Liability (Side A Coverage) – pays on behalf of any directors or officers for their liability arising out of wrongful acts.
  • Company Reimbursement or Company Indemnification (Side B Coverage) – reimburses the insured company for payment made to its directors and officers. The payments must involve the director or officer’s expenses incurred by reason of claims made against them for wrongful acts, and to which they are entitled by the company’s by-laws.

Top 5 Reasons to consider a D&O Policy?

  1. Directors and officers can be held personally liable for claims; organizations increasingly consider personal liability coverage as one of the most important aspects of their D&O program.
  2. D&O liability claims related to regulatory actions are increasing for all types of organizations, representing 23 percent of claims in 2012.
  3. Directors and officers increasingly desire additional assurances beyond corporate indemnification — 43 percent desire added protection in the event their company becomes bankrupt and/or insolvent.
  4. Directors and officers and their respective organizations are susceptible to a wide range of claimants1 including shareholders, competitors, customers, employees and government entities.
  5. D&O claims are increasingly common for private companies, public companies and nonprofits: 36 percent of all organizations reported claims in the last 10 years.

Where do Directors And Officers Liability Claims originate from?

Directors and Officers coverage-related losses originated from the following sources:

Direct and Derivative Shareholder/Investor Suits

  • Mergers and acquisition
  • Inadequate/inaccurate disclosure
  • Takeover threats or bids
  • Challenge to takeover defense measure
  • Divestiture or spin-off
  • Financial performance/bankruptcy
  • Dishonesty/fraud


  • Wrongful termination
  • Discrimination
  • Breach of employment contract (not termination)
  • Pension, welfare or other employee benefit disputes

Government and Regulatory Agencies

  • Dishonesty
  • Fraud
  • Violations of: Civil Rights, Wall Street Reform and Consumer Protection Act (Dodd-Frank) Violations and Sarbanes-Oxley Act

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