A directors & officers (D&O) liability insurance plays a crucial role by covering against various losses or damages which may arise against directors and officers of the company for wrongful acts done by them in their managerial capacity. In most of the cases, the insurer also covers defence costs and are usually paid in advance of the final verdict.

Overall, the D&O insurance plays a crucial role by giving protection for claims which are brought against officers, directors and employees for alleged breach of misstatements, facts, duty or errors in their managerial ability.

As far as the cost of D&O insurance is concerned, it depends on a variety of factors, like the type of your business, the revenue of your company, past claims along with your debts. Similarly, the kind of your industry or business also helps in deciding the cost of D&O insurance. Usually, small or medium-sized enterprises have to bear the same cost of D&O, irrespective of their industry. Then D&O cost also varies as per the risks associated with certain industries like communication, manufacturing, transportation, etc. As these industries have to go for high coverage, they pay more in terms of high premium.

Then young companies create more liabilities for insurance companies due to short financial history, new management and policies. The insurer will charge a high premium if you fail to prove that your business is viable. As said above, your debt flow would affect the D&O cost. It means, if you have steady cash flow and viable debt management, you would have to pay less for D&O insurance cover. However, the cost of D&O insurance policy would be high if you can’t prove that your business is financially solid.

In any case, you should never lower your D&O insurance cover just to save money. It means, if the cost of D&O insurance policy is slightly high, you should pay more to get coverage. By resorting to low insurance cover, you would have to pay high insurance cover if there is a claim in the future. Further, there is a deductible which would also form part of the cost of D&O insurance policy. Here, the deductible is the amount that you would have to pay from your pocket before the insurance company settles the remaining claim amount.

It is always feasible to compare D&O costs of various insurance companies before choosing the one insurer. Further, as the corporate insurance is a tricky field, you can always take the help of corporate insurance advisors like SecureNow and choose the right director & officers liability insurance as per your needs. In this way, you can also get the affordable rates on D&O insurance policy.


From the last ten years, J.S Software has been imparting software services, including technical consulting to clients which are situated in different parts of the world. Last year, J.S Software had to deal with a tough situation when one of its engineers, Rahul filed a case against the executive director of the company, Prakash Raj.

Rahul filed a complaint with Prakash that his manager, Shravan was making racial discrimination in the team. However, Prakash did not take action against Shravan and due to which Rahul had to quit the job. Now, Rahul filed a case against Prakash, and in the court, the verdict was given against Prakash and J.S Software. They had to pay Rs 25 lakh to Rahul as compensation.

This case compelled J.S Software to think what they could have done to avoid such a situation.


J.S Software could have saved itself from monetary losses if the company had purchased Director & Officers (D&O) liability insurance policy. The policy would have paid compensation to Rahul and would have also paid legal costs incurred by J.S Software in defending itself in the court. While deciding the cost of D&O insurance policy, the insurer would have considered the number of years since the company is in existence.

Read more: Who are covered under Directors & Officers (D&O) Liability Insurance Policy?

Here, J.S Software is in existence from last ten years and also maintains a steady cash flow; they would have to pay less for D&O insurance cover. Further, as the company is in the technology sector where risk is low, the company would have required paying a low cost for D&O insurance cover.

The cost of D&O insurance would also include a certain portion of deductible which J.S Software would have to pay at the time of claim before the insurer settles the remaining claim amount.