Directors & Officers D O Insurance

Directors and Officers Liability (D&O) insurance protects directors, officers, and other leaders of public, private, and non-profit corporations against personal loss, including damages and defense costs, arising from their status or conduct in management roles. Common claims allege breach of duty, securities law violations, and unfair competition, and defending those claims without coverage can put both personal and business assets at risk.

For directors and officers evaluating their exposure, this guide explains what D&O insurance is, why companies need it, the claims it commonly responds to, how Side A, Side B, and Side C coverage work, which exclusions apply, and why this protection matters for the business as well as the individuals who run it.

Why You Need Protection

Even if you don’t have outside shareholders, you are still at risk. On average, only 25 percent of directors and officers claims come from shareholders, with the remainder coming from other sources, such as vendors, customers, regulators, and employees. As a director or officer of any company, public or private, you can be held personally liable for your management actions. If your company is faced with a lawsuit, defending it could be financially debilitating. You’ve worked too hard and sacrificed so much to build a successful business. Don’t let others' actions put your business at financial risk.

Directors & Officers Liability Insurance Claims Examples

Stolen business opportunity – $2,500,000

The vice president of a manufacturer determined that a new product line presented tremendous sales potential. Instead of presenting his company with the opportunity, he shared it with his brother, who formed a new company to manufacture it. A shareholder sued the VP and the manufacturer, alleging a wrongful act and personal liability arising from taking advantage of an opportunity belonging to the corporation; d o insurance coverage may respond to alleged wrongful acts of this kind, subject to the insurance policy terms.

Violation of non-compete agreement – $850,000

A company recruited a top sales executive employed by a competing company. The competitor sued the company, bringing claims arising from alleged breaches of the non-compete agreement. Defense expenses were in excess of $250,000, and the competitor was awarded damages of $600,000; legal defense costs and other costs can escalate quickly in this type of dispute.

Breach of fiduciary duty – $2,000,000

A plaintiff brought action for injunctive relief to remedy breaches of fiduciary duty, specifically alleging gross negligence and lack of a fair process against certain directors of the defendant, and the plaintiff alleged wrongdoing by corporate directors in carrying out their fiduciary duties. Claims like this can be brought by plaintiffs and regulatory bodies when leaders are accused of officers' failed oversight or unfair decision-making. According to the claim, the defendant’s board awarded a regional operating license to one affiliate organization rather than the plaintiff. Defense costs alone exceeded $2 million.

Failure to supply business – $500,000

A retailer advised one of its suppliers to increase inventory because it expected business to increase significantly. The retailer’s business did grow, but it decided to move to another supplier. The original supplier sued the retailer, alleging that it relied on the retailer’s promise of more business and thus suffered damages when that business didn’t materialize; such claims may be brought by vendors and other parties, not just shareholders, and the supplier claimed financial losses after being negatively impacted by the retailer’s decision.

Get the protection you need tomorrow, today.

To learn more about our Directors and Officers (D&O) liability insurance products, speak with one of our experienced professionals today to see why this coverage can be important for small businesses, private companies, and nonprofit organization leadership alike.