Directors & Officers (D&O) Insurance - Protect Decisions at the Top

Board members and executives make tough calls every day. D&O insurance helps protect personal assets and the organization from claims alleging wrongful acts in management.

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Quick facts

D&O is claims‑made and typically covers wrongful acts in managing the entity.
Side A protects individual directors/officers when the entity can’t indemnify.
Public‑company Side C usually applies to securities claims only; private/NP forms are often broader.

Quote checklist

Legal structure & subsidiaries; # of directors/officers
Latest financials (rev, EBITDA, debt/liquidity)
Ownership (private/public/VC/PE), % USA exposure
Industry, key risks, and revenue streams
Bylaws indemnification & prior D&O limits/retro date
5‑year claims/litigation/regulatory history
Planned transactions (financing, M&A, IPO)

What D&O covers

Core protections

Allegations of wrongful acts (errors, misstatements, breach of duty) in management.
Defense costs, settlements, and judgments (where insurable by law).
Regulatory investigations and inquiries against insured persons (where covered).
Outside Directorship Liability (ODL) for service on outside boards (by endorsement).

Who is protected

Insured Persons: directors, officers, and often employees in managerial roles.
Entity: company coverage under Side C (scope varies by public/private/NP).

D&O is not the same as CGL, EPL, or Cyber; it works alongside them.

Who needs D&O?

Private companies - claims from creditors, competitors, customers, and shareholders.
Public companies - securities class actions, disclosure, and governance risks.
Non‑profits & charities - claims by funders, members, donors, and regulators.
Boards of subsidiaries & joint ventures - intercompany and minority‑shareholder issues.

Side A / B / C - how D&O is structured

Coverage Part	Protects	What it pays	Notes
Side A	Individual directors & officers	Loss when the entity cannot indemnify (insolvency or legal prohibition)	Often non‑rescindable for innocent insureds; consider Side A DIC for extra protection
Side B	The entity (reimbursement)	Reimburses the organization for indemnifying insured persons	Subject to corporate indemnification rules and retentions
Side C	The entity itself	Public: typically securities claims only; Private/NP: broader entity claims (varies)	Entity coverage shares the same limit-consider separate towers for large publics

Claims‑made basics - retro dates & notice

Claims‑made: the policy in force when a claim is made responds (not when the act occurred), subject to your retroactive date.
Retroactive date: keep it as far back as possible; avoid gaps to preserve prior acts.
Reporting: promptly report claims and circumstances that could lead to a claim.
Extended Reporting Period (ERP/tail): extra time after expiry/cancellation or change in control to report claims from past acts.
Pending & Prior Litigation date: excludes earlier disputes-know your date.

Term What it means Why it matters Limit of Liability One tower shared by Sides A/B/C unless Side A DIC purchased separately Defense costs usually erode limits-adequate limits are critical Retention (deductible) Applies to Side B/C; no retention often applies to Side A Financial strength informs retention choices Priority/Order of payments Directs the insurer to pay Side A claims before others Helps protect individuals during distress Defense Panel counsel vs. freedom of counsel; consent to settle & hammer clause Impacts cost control and claim strategy

Key endorsements & variations

Side A Difference‑in‑Conditions (DIC)

Separate excess policy for individuals that can drop down if the main D&O is rescinded or not collectible; often non‑rescindable for innocent insureds.

Investigation & pre‑claim inquiry costs

Extends coverage for regulatory interviews or books & records requests before a formal claim is made (sublimits apply).

Outside Directorship Liability (ODL)

Protects insured persons serving at the request of the entity on outside boards (non‑profits, JVs), excess of that entity's own D&O.

Entity EPL carve‑back / EPL policy

Employment Practices Liability is often excluded from D&O-purchase a dedicated EPL policy; some D&O forms add limited carve‑backs.

Run‑off for past directors

Ensures former directors/officers remain protected for acts during their tenure, including after retirement.

Governance best practices - helps underwriting and reduces risk

Active, documented board oversight with independent directors where feasible
Accurate, timely financial reporting and controls; audited statements for larger entities
Conflict‑of‑interest policy; minutes reflecting deliberation and dissent
Clear delegation of authority and signing limits
Whistleblower channel and anti‑retaliation policy
Cybersecurity, privacy, and compliance programs proportionate to risk

M&A & change in control - don't get caught without run‑off

A change in control (e.g., acquisition/IPO) usually triggers a switch to run‑off for the existing D&O-covering past acts only.
Buy a tail (ERP) to keep reporting rights for prior acts (commonly 6 years for M&A).
Place a new program for the go‑forward entity as needed.
Coordinate with reps & warranties insurance where applicable.

Common exclusions (high level)

Fraud, personal profit, or criminal acts (final adjudication)
Bodily injury/property damage (handled by CGL)-limited securities BI/PD carve‑backs may exist
Pending & prior litigation; known circumstances before inception
Insured vs. insured (with carve‑backs for derivative claims, whistleblowers)

Pollution (consider Environmental liability)
ERISA/pension trustee exposures (seek Fiduciary liability)
Employment practices (place dedicated EPL)
Contractual liability beyond duties as a director/officer

Claim scenarios (examples)

Creditor action (private company): Alleged misrepresentation of solvency to a lender; directors named personally.
Regulatory investigation: Requests for documents/interviews regarding compliance; defense costs mount quickly.
Securities disclosure (public): Alleged misleading statements about forecasts lead to a drop in share price and a class action.
Non‑profit governance: Donor alleges misuse of funds; board decisions scrutinized.

FAQs

Does D&O protect personal assets?

Yes-especially under Side A when the organization cannot indemnify. Adequate limits and order of payments help prioritize individuals.

Is employment claims coverage part of D&O?

Usually not. Employment Practices Liability (EPL) is generally a separate policy. Some D&O forms provide limited carve‑backs-ask us to review.

How much limit do we need?

Depends on size, industry, balance sheet, leverage, USA exposure, ownership structure, and risk tolerance. We'll benchmark against peers and consider a Side A DIC layer.

What happens if we're acquired?

Existing D&O typically goes into run‑off for past acts. You'd purchase an ERP/tail for several years and arrange a new policy for the acquiring structure.

Can individual directors buy their own coverage?

Yes-Side A DIC policies can be purchased to protect individuals in addition to the corporate D&O tower.

Ready for a D&O insurance quote?

Share your structure, financials, and upcoming plans-we'll build a program with the right limits, Side A protection, and endorsements.

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