Directors & Officers Liability Insurance

Listed below are some of the standard features you will find in all Directors and Officers liability policies. This document is meant to be a general overview of Directors and Officers coverage. For more detailed information on a specific carrier's coverage feature, refer to the coverage specifications portion of your proposal.

Insuring Agreements

Your policy will have three insuring agreements:

Coverage A

Personal Protection

Directors & Officers Liability

Coverage A pays on behalf of the directors and officers for any alleged wrongful act in their capacity as directors and officers. This coverage does not apply if the individual insureds are indemnified or entitled to indemnification by the corporation— coverage would then fall

Coverage B

Balance Sheet

Corporate Reimbursement

Coverage B is the corporate reimbursement portion of a Directors and Officers liability policy. The policy will pay on behalf of (or will reimburse to) the corporation the amount the corporation is required (or permitted) to pay as indemnification to the directors and/or

Coverage C

Balance Sheet

Entity Coverage for Securities Claims (Public company policies) Employment Practicies Coverage (Private company policies)

Coverage C pays on behalf of the Corporation Loss from Securities Claims for any actual or alleged Wrongful Acts by the Entity, Employee and Director or Officer. Coverage C is replaced by Employment Practices coverage for most private company policies.


Determination of the amount of defense costs, settlements or judgements "allocated" to (1) covered and uncovered acts / claims against insured directors and officers, and (2) claims against covered parties (directors and officers) and uncovered parties (the corporation and other uninsured defendants).

Wrongful Acts

The D&O contract typically applies on an "all risk" basis to claims made within the policy period for "wrongful acts" commonly defined as:

"any breach of duty, neglect, error, misstatement, misleading statement, omission or act by the directors or officers of the Company in their respective capacities as such, or any matter claimed against them solely by reason of their status as directors or officers or the Company."

Claims Made

D&O coverage is for claims made during the policy period for Wrongful Acts committed prior to or during the policy period.

Limits of Liability

The Limit of Liability is the maximum amount of insurance available to pay for claims under a policy. Directors and Officers carriers typically offer an annual aggregate limit of liability. This means that one amount is the maximum available for all claims made during the policy period. 


The Retention will apply to each and every claim made during the policy period. For non-indemnifiable claims, the Retention will be $0.

Standard Enhancements

Several enhancements are becoming standard within the policy or by endorsement:

  • Automatic Subsidiary Coverage
  • Spousal Extension
  • Outside Directorship Liability for Non-Profit Organizations
  • Advancement of Defense Costs for Coverages A and B
  • No Failure to Maintain Insurance Exclusion
  • No Greenmail / Hostile Takeover Exclusion
  • Post Policy Period Claims Reporting Window
  • Treatment of Severability
  • Definition of Application
  • Final Adjudication Language
  • Secondary Offering


As is common with most insurance policies, certain exclusions do apply. Due to the "all risk" basis of this contract, thorough examination of policy exclusion of policy exclusions is of the highest priority. Standard exlcusions are organized by category below:

Exclusions Based Upon Pre-existing Wrongful Acts
  • Known wrongful acts
  • Pending and/or prior litigation
  • Existing wrongful acts reported elsewhere
Exclusions Based Upon Insurance Available Elsewhere
  • ERISA violoations
  • Bodily injury / property damage
  • Pollution
  • General Partnership Liability
  • Professional Errors and Omission
Exclusions Based Upon Policy Intent
  • Acts outside the Insured Person's capacity as a director or officer
  • Insured versus insured
  • Outside directorship liability
Exclusions Based Upon Public Policy
  • Fraud, dishonesty and criminial acts ("in fact" versus "final adjudication")
  • Personal profit or illegal remuneration
  • Punitive damages (most favorable jurisdiction
Exclusions Based Upon Known Problematic Areas
  • Hostile takeover
  • Failure to maintain insurance
  • Greenmail
  • Securities claims
Exclusions Based Upon Underwriter Uncertainty
  • Investigative orders
  • Secondary offerings