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.
