Hello there

Sign in with

Welcome Back!

Sign in to Continue



By continuing, you agree to the updated Terms and conditions, Privacy Policy.

Forgot password?

Nice to meet you

We see you’re not a member yet. Sign up to get started.


By continuing, you agree to the updated Terms and conditions, Privacy Policy.

It’s done!

You have successfully created your account.

Forgot Password?

No worries. Enter your email ID and we’ll send you a mail to reset your password.

Reset Password?

Reset your password.

Email sent!

You have successfully sent the reset password email to your email id.

You have successfully reset your password. Login with new credentials.


Decoding the Functioning and Structure of Directors and Officers (D&O) Insurance

Author: Team Finpage
Wednesday, August 09, 2023

While steering your company towards success you try to navigate carefully through the intricate world of corporate governance. But what happens when the actions of directors and officers come under scrutiny? That's where Directors and Officers (D&O) insurance steps in as a knight in shining armour, protecting your top leaders from personal liability. 

In this informative blog, we'll unravel the inner workings of D&O insurance, exploring its structure, coverage, and why it's an absolute game-changer for savvy business owners like yourself. So, get ready to gain valuable insights, as we break down this vital aspect of business insurance. 

What is D&O insurance?

D&O is short for Directors and Officers. This insurance policy shields D&Os from personal liability if they face lawsuits or allegations related to their role in the company. 

It provides coverage for legal expenses, settlements, and judgments. It ensures that your leaders are safeguarded from the financial impact of such claims.

Having a comprehensive D&O protects the personal assets of your directors and officers. It also instils confidence in them to make sound decisions without fear of personal liability. 

In a nutshell, D&O insurance is like a safety net for your business and its leaders. It provides peace of mind and ensures business continuity. 

Why is D&O insurance required?

Here are a few reasons, why D&O Insurance is required in an organisation:

  • Personal Financial Protection: D&O insurance shields directors and officers from personal financial liability.

  • Attracting Top Talent: It helps attract experienced individuals by demonstrating a commitment to their well-being.

  • Safeguarding the Business: D&O insurance covers claims related to securities and shareholder actions, protecting the company's interests.

  • Maintaining Financial Stability: It prevents directors and officers from personally bearing the costs of legal actions.

  • Peace of Mind: D&O insurance provides confidence and peace of mind to directors and officers.

Features and Benefits of D&O Insurance Policy

Here are the key features and benefits to consider:

  • Blanket Cover: The D&O insurance policy provides coverage for directors of all ages and positions. It includes retired, current, and future directors, without specifying their names.

  • Protection against Errors and Misconduct: This business insurance safeguards against alleged or actual errors, omissions, misstatements, breaches of duty, or misleading statements made by directors and officers.

  • Investor Confidence: Having D&O coverage is often seen as a prerequisite by investors. It demonstrates that the company has taken steps to mitigate risks associated with its leadership team.

Types of Directors and Officers Insurance

There are two primary clauses under D&O insurance with the option of selecting a third clause:



Who is Insured? 

What is at risk?

Side A

The insurer pays on behalf of directors and officers for any claim made directly against them when a company cannot pay for it or is not allowed legally. There is no deductible and retention in Side A cover, however, the personal assets are covered.

Individual Directors, officers or manager

Personal Assets

Side B

The company pays on behalf of directors and officers and then gets reimbursement for the amount paid in indemnifying the directors and officers from claims made against them.


Corporate Assets

Side C

Insurers cover the entity for securities litigation claims. Insured can raise a claim against the company itself for a wrongful act in connection with the trading of its securities.


Corporate Assets

What is covered under D&O Insurance Policy?

D&O liability insurance includes the following coverage options:

  • It covers subsidiaries, retired directors, outside directorship, and various assets. This includes expenses like bail bonds, prosecution, and legal representation.

  • The policy includes coverage for claims related to employment practices.

  • It provides coverage for claims arising from negligence or failure to monitor.

  • It offers coverage for expenses related to managing regulatory crises.

  • It may cover costs associated with damage to the insured party's reputation.

  • The policy allows for reporting claims that arise after the policy period.

  • Additional coverage limits may be provided for non-executive directors.

What is Not Covered Under D&O Insurance Policy

D&O insurance does not cover certain things, including:

  • Fraudulent activities.

  • Intentional non-compliant activities.

  • Personal profit or illegal remuneration.

  • Actions that are taken before the policy started.

  • Property damage or bodily injury.

  • Fines and penalties.

Who is Covered Under D&O Liability Insurance

D&O liability insurance can provide coverage for the following individuals:

  • Company Secretaries

  • Legal heirs

  • Directors

  • Employed lawyers

  • Estate representatives

  • Officers

  • Spouses

Who can take action against Directors and Officers?

Here's a list of individuals and entities who can take action:

1. Employees: Current or former employees who believe they have been wronged or treated unfairly.

2. Competitors: Rival companies who may allege unfair business practices or breaches of competition laws.

3. Suppliers: Suppliers who may claim non-payment or breach of contractual obligations.

4. Regulators: Government agencies or regulatory bodies responsible for overseeing industry compliance.

5. Shareholders: Individuals who own shares in the company and seek accountability for actions affecting their investment.

6. Customers: Consumers or clients who may have experienced harm, negligence, or breach of contract.

7. Other stakeholders: Any other parties who have a vested interest in the company, such as creditors or community members.

Wrapping Up

We have explored the working and structure of D&O insurance, gaining valuable insights into its importance for business protection. Let's recap the key takeaways:

  • D&O insurance is a vital insurance policy for directors and officers, providing coverage for legal expenses, allegations of negligence, and breach of duty.

  • The policy structure includes various components such as defence costs, indemnification, and entity coverage, which collectively protect both the individuals and the company.

  • By securing D&O coverage, businesses can attract talented directors, mitigate financial risks, and ensure the smooth functioning of their operations.

Remember, safeguarding your business with appropriate insurance policies is a proactive step towards minimising risks and protecting your organisation's future. 

By staying informed, consulting with insurance experts, and making informed decisions, you can ensure the long-term success and resilience of your business.

Team Finpage

Latest Comments

No Comments



Refrain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks, name calling or inciting hatred against any community. Help us delete comments that do not follow these guidelines by marking them offensive. Let's work together to keep the conversation civil.

We see you’re not a member yet. Sign up to get started.
Already member Sign in


Be the first one to know about latest happenings in the InsurTech sector. Click below to subscribe to our newsletter!