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Directors & Officers Liability Insurance

Protect your company's executives from personal financial liability

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What Is Directors & Officers Liability Insurance?

Directors & officers liability insurance, sometimes referred to as management liability insurance, brings protection to the personal assets of executives, directors, and board members if they are named in lawsuits related to the work they conduct for your business. There are many risks when running a business that can potentially expose managers to litigation. If a company wants its officers to feel empowered to make difficult choices, a directors & officers liability insurance policy can do just that.

If the decisions the executive team members are making on behalf of the organization can potentially cause financial loss or hardship, then there might be a need for a directors & officers liability insurance policy.

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Everything You Need To Know About
Directors & Officers Liability Insurance


Does your business need directors & officers liability insurance?

Executives from all company sizes, industry segments, and job functions face litigation risks. It doesn’t matter if they work for a large publicly traded company or a small family-owned business. Organizations that consider investing in a directors & officers liability insurance policy often have at least one of the following:

  • A need or desire for recruitment of industry-leading executives
  • A board of directors
  • Investment partners (angel investors, seed funds, venture capital, etc.)
  • An advisory committee

Companies that want to attract leading candidates for any of the covered positions can increase the attractiveness of the position by reducing the applicant's personal risk exposure with a directors & officers liability insurance policy.

Are board members also covered under directors & officers liability insurance?

Yes, board members can be covered under a directors & officers liability insurance policy. Board members can face unique risks that aren’t covered under general liability policies, unlike management. When they fire executives, take financial risks, or compete with similar products, they become exposed to personal risk that requires D&O to provide a safety net for their personal assets.


What does directors & officers liability insurance cover?

As with any insurance policy, directors & officers liability insurance policies can range in coverage based on discussed options with a qualified insurance agent. A directors & officers liability insurance policy may cover legal expenses if executives are directly sued.

A group of specific officers or all officers

A directors and officers liability insurance policy can be customized to protect a specific group of officers within a business or all officers and directors. This difference should be a requirement that is identified when working with your insurance agent.

Unfavorable investments

An investment that ends up costing a company millions of dollars in lost revenue can easily become the subject of a lawsuit. If an officer is sued due to an investment of company funds that turns out badly, directors & officers liability insurance can cover lawsuit costs and protect that officer’s personal assets.

Employment disputes

If a worker names an officer or board member in an employment-related lawsuit, a directors & officers liability insurance policy may cover lawsuit costs to protect their personal assets. These cases can involve discrimination, breach of contract, slander, and more.

Third-Party Defamation

A third-party can sue your officers for libel or slander. A directors & officers liability insurance policy can help cover legal expenses that those executives face. Defamation lawsuits can come from any associated third-party, but commonly start with competitors, customers, or other investors.

Bylaw violations

When a bylaw is overstepped or directly violated, company stakeholders may feel strongly enough to sue. Some bylaws can include clauses like board member election policies, stock issuance, director indemnification, conflict of interest, and voting requirements. If a company stakeholder feels one of these, or other stated bylaw, has been violated, a directors and officers liability insurance policy can protect personal assets of the accused.

Industry regulations

Every industry has a different set of regulations they must abide by. In the event an officer does not uphold these standards they can be sued. Guidelines can range from data protection practices like the Health Insurance Portability and Accountability Act (HIPAA) or Payment Card Industry standards (PCI), to physical safety like Occupational Safety and Health Administration standards (OSHA).

What does directors & officers liability insurance NOT cover?

Directors & officers liability insurance will only cover legal expenses related to the management team listed within the policy details unless a whole business policy is purchased. Some scenarios where D&O will not cover expenses are: illegal actions, work-related injuries, customer injuries, errors and omissions, or property damage.

Illegal activity

Most illegal actions that result in a criminal investigation against an executive will not be covered by directors & officers liability insurance. Criminal acts like securities fraud, money laundering, embezzlement, and corporate fraud fall outside of typical policy coverage.

Executive or board member injuries

If an executive or board member injures themselves during the course of work, directors & officers liability insurance will not cover their medical expenses. These will typically be covered by a workers’ compensation insurance policy, which is required in most states for businesses with at least one employee.

Customer injuries

A general liability insurance policy can help cover medical and legal expenses if a customer is injured while interacting with your business.

Errors and omissions

In case your business is accused of professional negligence like incomplete or inadequate work, you will require a professional liability insurance policy for coverage.

Property damage

Property damage is not covered under D&O liability insurance. Property damage that occurs to business-owned property is covered under commercial property insurance and third-party property damage is covered under general liability insurance.


How much does directors & officers liability insurance cost?

Directors & officers liability insurance policies can greatly range in price. A small family-run business with only a handful of managers will require significantly less coverage than a large corporation with an entire executive suite, board of directors, board of advisors, and investors. Some other factors that may change a policy’s rates are:

  • Prior D&O claims
  • Company revenue
  • Number of employees
  • Industry
  • Business age
  • Individual coverage vs. whole company coverage

Speak with one of our licensed insurance agents to get an accurate directors & officers liability insurance quote >


How do I make a directors & officers liability insurance claim?

Most carriers have online claim reporting capabilities, or you can call their toll-free claims reporting phone number. At Winooski Insurance Agency, we are available to provide information about the claim reporting process. Our clients can rest easy knowing our experienced agents are ready to help when needed.

View a list of our partner carriers and instructions on where to file a claim with each.

Why should I get a directors & officers liability insurance policy through an independent agency?

Winooski Insurance has been an independent insurance agency for almost 40-years. During this time, we have created long-term relationships with a multitude of insurance partners which allows us to present you with a broad range of coverage options at competitive rates. We’re committed to helping you address your unique requirements.

What Other Types Of Insurance Should Your Business Consider?

General Liability Insurance

Protect your business from common third-party injuries, damages, and risks.
Learn More

Commercial Property Insurance

Protect your company's property and inventory from damage or destruction.
Learn More

Commercial Auto Insurance

Safeguard your business-owned and operated vehicles from accidents and lawsuits.
Learn More

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Aspenti Health

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Professional Construction Inc.

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