ImageD&O Liability Insurance Policy – Directors and Officers Liability Insurance

The Benefits of D&O Insurance

Comprehensive cover

Directors and officers liability covers a wide range of litigation that could arise from customers, vendors, shareholders,employees and general public. This board insurance also covers litigation arising due to acts of another company, where the insured is serving as a nominee director.

Worldwide Coverage

D&O insurance can provide worldwide coverage. If the company has operations abroad, it can provide worldwide coverage for both territory and jurisdiction. This could cover claims arising from shareholders based abroad, or suppliers and clients being headquartered abroad.

Full Defence Cost

The Director liability insurance policy would pay for lawyers fees to defend a case in court. In addition, via add-on covers it can reimburse expenses to respond to a regulatory notice, investigation by authorities, and cost of hiring a PR consultant to minimize losses.

Employee Related Claims

Directors and officers insurance carry an extension called Employment Practices Liability Insurance (EPLI) and Entity EPLI. Employees may sue for acts such as sexual harassment, and biased termination.Entity EPLI extension extends this coverage to the company as well.

Directors and Officers Liability Insurance


Get free D&O E-book

Quick Guide to D&O Insurance

What Is Directors and Officers (D&O) Liability Insurance Policy?

Directors and Officers Liability Insurance, also called Directors Liability Insurance or D&O Insurance Coverage, is a liability insurance which protects the directors and officers (executives) of a company and their spouses, against the personal liabilities arising due to any legal action taken against them by employees, vendors, investors, competitors, customers or other parties for their action in their managerial capacity. A directors and officers liability insurance coverage can also provide for the legal fees and other costs the organization may incur as a result of such a suit.

Why is a Directors and Officers (D&O) Liability Insurance Policy required?

Directors and Officers Policy is required to protect directors & officers of a company from personal losses which may arise due to decisions and actions taken by them as a part of their duties. Such risks include:

  • Breach of fiduciary duty
  • Customer suits
  • Misrepresentation of company’s assets
  • Misuse of company’s funds
  • Failure to comply with workplace laws
  • Sexual Harassment and Discrimination Allegations
  • Accounting irregularities
  • Other stakeholder claims, etc.

Types of Directors and Officers (D&O) Liability Insurance Policy

There are three types of insuring agreements of a D&O policy:

  • Side A: Covers directors & officers of a company where the company does not pay or is financially unable to pay for indemnification of them. Under this type, an individual officer is insured whereas his/her personal assets are at risk.
  • Side B: Covers directors & officers of a company where the company grants indemnification to them. In this case, the policy reimburses the legal costs to the company. Under this type, the company is insured and corporate assets are at risk.
  • Side C: This side-coverage is also called ‘entity-coverage’ and it provides coverage to the corporate entity itself. Under this type, the company is insured and corporate assets are at risk.

The scope of D&O Liability Insurance Policy

Directors liability insurance provides financial protection to the company in case of a claim against their directors, officers and key employees for an alleged wrongful act in a managerial or supervisory role. It provides coverage for defense costs, subsidiaries, outside directorship, retired directors, employment practice liability, regulatory crisis response, damage to reputation, heirs, estates and legal representatives, emergency costs, kidnap response; and so on. Any entity with a corporate board or advisory committee should consider buying a D&O Liability insurance, including non-profit organizations as this policy saves from unforeseen financial losses arising due to third-party liabilities.

Key Benefits of Directors and Officers (D&O) Liability Insurance Policy

Directors & Officers liability insurance policy offers numerous benefits. Some of the key benefits of this policy is that it provides cover for:

  • Defense costs
  • Shareholder actions
  • Inaccurate or inadequate disclosure
  • Creditor claims
  • Employment practices and HR issues
  • Competitor claims
  • Corporate manslaughter
  • Breach of fiduciary duties

What Does D&O Liability Insurance Policy Cover?

D&O Insurance policy covers directors & officers against:

  • Breach of trust
  • Breach of duty
  • Managerial Errors
  • Misleading Statements
  • Wrongful trade practices

Note: This is just an indicative list, complete list of inclusions will be part of the policy document.

What Doesn’t Cover D&O Liability Insurance Policy?

D&O Liability Insurance Policy does not cover:

  • Bodily injury or property damage
  • Fraudulent acts
  • Illegal remuneration or personal profits
  • Intentional criminal acts
  • Fines and penalties

Note: This is just an indicative list, complete list of inclusions will be part of the policy document.

Frequently Asked Questions

The rising number of corporate frauds and tightening regulatory framework has made buying D&O insurance coverage more crucial than ever. The directors & key officers of a company are more exposed to risk as they are involved in day to day activities of the company. A D&O policy is one type of liability insurance which protects the past, present and future directors of an organization(of profit and non-profit both the organization) and its officers against the liabilities arising from an actual or alleged wrongful activity that they may have done while performing their duties.
Past, present and future directors and officers can use d&o liability insurance policy to protect themselves from any legal suit filed against them for their action by virtue of their role. Organizations who wish to protect their executives against unforeseen legal liabilities must consider buying such an insurance policy.
Below mentioned people can bring action against Directors & Officers:
  • Employees
  • Competitors
  • Suppliers
  • Customers
  • Shareholders
  • Regulators
  • Other Stakeholders
  • This is an indicative list only, officers and directors can face legal suits from other sources by virtue of their job, and a D&O liability insurance will protect their reputation and the firm’s reputation as a whole.


    Features of a D&O liability insurance policy

    Directors’ and officers’ (D&O) liability insurance forms an integral part of the risk-management strategies of most organisations. In contrast, those that do not buy this insurance could end up paying hefty amounts in legal costs and settlements...
    Read More

    What are the criteria for selection of the best D&O insurance company?

    A directors and officers (D&O) insurance policy provides unmatched coverage to organisations and their key personnel against third party liabilities. If the directors and officers of a company commit mistakes or neglect important details, they might suffer a liability claim from third parties...
    Read More

    D&O cover for estates and legal representatives

    Directors and officers are often the face of a company and work for its growth and profitability. However, during the course of their work, they might have to make decisions that end up being wrong...
    Read More

    Search Insuropedia - Enter Your Question.

    Why SecureNow?

    Deep Product Knowledge

    Leverage specialized underwriters and international experts unique for each line of business.

    Cost-effective Insurance

    Works with all the leading insurers to discover the best price for most comprehensive features.

    Quick Turnaround Time

    Get cover note issued within 24 hours. All service requests are resolved in pre-defined TATs.

    Strong Claims Support

    Manage all aspects of claim including insurer, surveyor & TPA co-ordination, and documentation.

    Value-Added Services

    Receive risk diagnostic reports, themographic studies, policy analysis, and wellness programs.

    Policy Administration System (PAM)

    Access your insurance policies through single login; service requests, MIS, and renewal alerts.

    Directors and Officers Liability Insurance Blog