Businesses and organizations generally purchase commercial insurance coverage to protect assets, but they also need to prepare for the array of claims that can target individuals in leadership. For instance, business leaders can sometimes be held responsible for a company's failure when it comes to issues like complying with regulations or providing a safe working environment. According to the Insurance Information Institute (Triple-I), claims that can target a company's directors or officers in addition to the company itself include:
  • Shareholder suits over company or stock performance;
  • Creditor or investor suits about mismanagement or dereliction of fiduciary duties;
  • Misrepresentation in a prospectus;
  • Decisions exceeding the authority granted to a company officer;
  • Failure to comply with regulations or laws;
  • Employment practices and HR issues;
  • Pollution and other regulatory claims; or
  • Cyber liability.
Exclusions for D&O policies typically include things like fraud, personal profiting, insured versus insured claims, and pending litigation.

What does D&O cover?

As the Triple-I explains, there are several "sides" to a D&O policy that each provide for a different set of coverages these include:

  • Side A: This coverage protects a corporation's directors and officers when the company isn't able to indemnify the individuals.
  • Side B: This coverage reimburses the organization when it does indemnify an individual, which Triple-I notes can protect the company's balance sheet.
  • Side C: This is often referred to as "entity coverage" and it eliminates disputes of coverage allocation when both directors and officers as well as the insured organization are named as co-defendants in a securities lawsuit.
In the slideshow above, we'll look at 11 different types of businesses that should consider D&O coverage.

Related:

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