What Is Directors & Officers Insurance?

Directors & Officers (D&O) insurance protects the personal assets of company directors, officers, and managers when they are sued for decisions made in their leadership capacity. It also reimburses the company for legal costs when it indemnifies its leaders.

Who Needs D&O Insurance?

Startups seeking funding — investors almost always require D&O
Nonprofits — board members face unique personal liability risks
Public companies — SEC investigations and shareholder lawsuits
Private companies — customer, vendor, and employee lawsuits targeting leadership

What Does D&O Cover?

Side A — Protects individual directors/officers when the company can't indemnify them
Side B — Reimburses the company for indemnifying directors/officers
Side C — Covers the entity itself for securities claims

Common claim scenarios include:

Mismanagement allegations
Breach of fiduciary duty
Regulatory investigations
Employment practices claims against leadership
Shareholder derivative suits

How Much Does D&O Cost?

D&O premiums range from $1,000–$5,000/year for small private companies to $10,000+ for larger organizations. Key factors include company size, industry, revenue, funding stage, and claims history.