Directors & Officers Liability Insurance

Why having Directors & Officers Liability Insurance is Important

Directors and Officers (D&O) Liability Insurance is designed to protect the personal assets of corporate directors and officers, as well as the organization itself, from lawsuits alleging wrongful acts in the management of the company. These claims may come from shareholders, employees, regulators, or other stakeholders.

Coverage includes legal defense costs, settlements, and judgments resulting from allegations of mismanagement, breach of fiduciary duty, or regulatory violations. Most D&O policies are structured into three parts: Side A (protects individual directors/officers), Side B (reimburses the organization for indemnifying directors), and Side C (provides direct coverage to the entity itself).

This insurance is particularly important for publicly traded companies, nonprofit organizations, and businesses with outside investors. Many board members and executives will not serve without it, as the financial and reputational risks of personal liability are significant.