Director & Officer Liability

Directors and officers (D&O) liability insurance protects the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued by employees, vendors, competitors, investors, customers, or other parties, for actual or alleged wrongful acts in managing a company.

The insurance, which usually protects the company as well, covers legal fees, settlements, and other costs. D&O insurance is the financial backing for a standard indemnification provision, which holds officers harmless for losses due to their role in the company. Many officers and directors will want a company to provide both indemnification and D&O insurance.

Directors and officers are sued for a variety of reasons related to their company roles, including:

  1. Breach of fiduciary duty resulting in financial losses or bankruptcy
  2. Misrepresentation of company assets
  3. Misuse of company funds
  4. Fraud
  5. Failure to comply with workplace laws
  6. Theft of intellectual property and poaching of competitor’s customers
  7. Lack of corporate governance
  8. Illegal acts or illegal profits are generally not covered under D&O insurance.


Directors and officers is a type of liability insurance that covers individuals for claims made against them while serving on a board of directors and/or as an officer. This type of policy can be written to cover directors and officers of for-profit businesses, privately held firms, not-for-profit organizations and educational institutions. There are several elements—called “Sides”—to a D&O policy, including:

  1. Side A—Protects a corporation’s directors and officers when the company cannot indemnify the individuals.
  2. Side B—Reimburses the organization when it indemnifies the individuals, thus protecting the company’s balance sheet
  3. Side C—Also known as “entity coverage,” this eliminates disputes of coverage allocation when both the directors and officers and the insured organization are named as co-defendants in a securities lawsuit.

A wide range of claims against a business have the potential to target company leadership for responsibility—and liability. Business leaders can be held responsible for a company’s failure to comply with regulations and to provide a safe and secure workplace. In addition, if a company is found liable for losses because of operational failures and mismanagement, directors and officers may be exposed to liability as well. The types of claims that may target company leadership individually as well as the company itself typically include:

  1. Shareholder suits over company or stock performance.
  2. Creditor or investor suits over mismanagement or dereliction of fiduciary duties.
  3. Misrepresentation in a prospectus.
  4. Decisions exceeding the authority granted to a company officer.
  5. Failure to comply with regulations or laws
  6. Employment practices and HR issues
  7. Pollution and other regulatory claims
  8. Cyber liability

Object of Insurance

Any one claim and in the Aggregate inclusive of Cost & Expenses


  1. Fraud
  2. Personal profiting
  3. Accounting of profits, and other illegal compensation exclusions
  4. Pending and prior litigation
  5. Prior (late) claim notice
  6. Bodily injury/property damage
  7. Insured versus insured claims
  8. Others under D&O Policies

Limit of Liability

The Limit of Liability is the total aggregate limit of our liability in respect of all Loss in respect of all Claims made during the Policy Period (including any Discovery Period, if applicable)

Minimum Data Requirement

The cost of directors and officers liability insurance is based factors such as:

  1. The business’s amount of debt
  2. Claims history
  3. Company revenues
  4. Policy limits
  5. Type of business

Claim Procedures

  1. As a condition precedent to our liability under this Policy, You or the Company must provide Notification as soon as practicable.
  2. If during the Policy Period You first become aware of a Wrongful Act or first become aware of a situation that You consider may become a Claim, You or the Company must provide Notification as soon as practicable, in which case any Claim that is subsequently made will be treated as having been made during the Policy Period.

For initial information you may share some information below:

  1. Detail chronology of event
  2. Claim letter or any written information of any potential sue/claim from third party against the Insured in respect of any wrongful act covered under the Policy
  3. Other supporting document

The policy always strictly disallow you to admit any liability and/or appointing a lawyer without the Insurer’s consent. Thus, please do let us know, prior you decide on this particular.