What is Director’s and Officer’s Liability

Did someone reach out to you to serve on a board of directors?

Are you currently on a board of directors for an organization or nonprofit?

If so, the number one thing you need to do is check if they carry Directors & Officers liability insurance.

What is Directors & Officers Liability Coverage?

Directors and officers liability coverage, or otherwise known as D&O coverage, protects the personal assets of corporate directors and officers, and their families, in the event they are personally sued for actual or alleged wrongful acts while working on behalf of the organization.

This includes anyone who serves as a director or an officer of a FOR-PROFIT business as well as a NON-PROFIT organization.

This policy will cover the personal losses but it can also help reimburse a business or nonprofit for the legal fees or other costs incurred in defending the board members against lawsuits.

Directors and officers of organizations can be sued for a variety of different reasons related to their role as a board member.

Some of these reasons include:

  • Misrepresentation of company assets
  • Misuse of company funds
  • Fraud
  • Break of fiduciary duty resulting in financial loss
  • Theft of intellectual property
  • Failure to comply with workplace laws

One thing to point out, Illegal acts or illegal profits are generally not covered under the D&O Coverage.

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Does your company need D&O coverage?

All businesses that operate with a corporate board of directors should invest in D&O coverage. The business can be a multi-million dollar company or a small local nonprofit or community organization.

You mostly see volunteers in these positions, especially when referring to nonprofits or community organizations. A director’s and officer’s policy will protect them and give them peace of mine to volunteer their time on the committee.

Studies show that director and officers insurance claims happen to a wide range of businesses, never assume it would only happen to large public companies.

What’s Next?

I have been a member of multiple boards of directors over the years and get asked frequently.

This has been the first question I ask before I consider joining. Not because I don’t want to help and give back time, but so I can make sure I am protected in the event something happens.

If you are a part of a board of directors, or your company has a board of directors make sure you have Directors & Officers coverage as part of your insurance package.

Reach out to your insurance agent to have this conversation, if you don’t have a relationship with an agent or want a review of your insurance then click the button below to schedule a review with one of our trusted insurance advisors.



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