5 Best Directors & Officers (D&O) Insurance for 2023

Thang Truong
Thang Truong
Updated on:

Even if you think you have the most solid and upstanding directors and officers on your board of directors, a lawsuit can strike at any time. Shareholders may sue if the company isn’t doing as well as promised or possibly someone misread local pollution ordinances. When a lawsuit comes after your company’s leadership, directors and officers (D&O) insurance can protect them. Read on to learn more about this type of insurance in-depth, how much it costs, and the top 5 providers of D&O insurance  

Top 5 Providers of Directors and Officers Insurance 

Below we’ve listed some of the top options for finding D&O insurance.  

CoverWallet: Best for Comparing Online Quotes

CoverWallet is a digital commercial insurance broker. They specialize in providing a wide variety of business insurance policies to small and medium-sized businesses. They work with many leading business insurance companies.

One you provide your and your business’s information, CoverWallet is able to provide you with several quotes that you can compare and select the best one. If you are new to buying D&O insurance for your company, you should definitely have a conversation with one of their agents who are very knowledgeable and willing to explain to nuances of business insurance in general and D&O insurance in particular.

CoveWallet provides business insurance and D&O insurance to businesses in many sectors, including non-profit organizations.

Foundershield – Specializing in startups, especially high-growth ones

This company specializes in offering digital insurance products for high-growth companies. As such, it offers comprehensive directors and officers insurance, clearly outlining the difference between sides A, B and C.  

In order to get a quote, you have to create a profile with the company. The system requires that you upload recent annual financial statements, so for this reason we were not able to get a quote.  

Dumont – Best for Excess Coverage

You can also find D&O insurance here. The company offers excess side A insurance as well, if you need to broaden coverage. There’s a place to request a free quote by entering in contact information, at which point it simply tells you the message was sent successfully. The system then auto-emails you an application.        

HUB International – Comprehensive Coverage

This company has a comprehensive directors and officers insurance plan covering personal asset protection, claims protection, and workplace and employment protection. In order to get the process started, the company wants you to fill out a contact form so a representative can get back to you.

Travelers – No-fuss plan with help from a face-to-face local agent 

Travelers also advertises that you can find D&O insurance through them. The plans are no-fuss options that help cover defense costs and damages. In order to find a quote, you must talk to a Travelers agent.  

AIG – Specialized products offering added coverage 

AIG offers several different products to fit custom needs. There’s the primary D&O coverage that offers direct entity coverage. Side-A Select offers additional coverage like added limits. There’s also Side-A Match Edge for further added coverage. To get the process started, you must submit a form so someone can contact you.

Finding Directors and Officers (D&O) Insurance Quotes Online 

To find quotes, we put in a tech corporation with $100,000 in annual revenue and 5 employees.  

We tried CoveWallet, but at the end of the quote process, we got a message saying an online quote could not be generated and we had to call a phone number. With how intricate this type of insurance is, this makes sense.  

>>MORE: Best Professional Liability Insurance Companies for Small Business

What is D&O Insurance? 

It’s easy to assume that when a lawsuit strikes, it will only affect the business itself. However, individual officers and directors of a company may be at risk for financial losses, personally. So that’s where directors and officers insurance (or D&O insurance) comes into play. In short, this type of insurance covers officers and directors individually while they are serving in those roles. It protects directors and officers from claims and law suits against them personally. However, it doesn’t stop there.

Foundershield, a digital business insurance broker that specializes in D&O insurance, outlines the history of D&O policies. They used to protect the personal assets of the leadership of a company. Now, companies can indemnify executives against claims and then get reimbursement from directors and officers insurance policies. Also, if a suit is brought against a company itself, these policies can protect the entity and leadership individuals. 

Further, some policies extend the coverage to employees and volunteers beyond the board of directors. Such individuals that could be covered include employed lawyers, scientific advisory boards, and external advisors.  

Types of D&O Insurance

According to the Insurance Information Institute (III), there are actually three main components in most of these policies, broken down into what are known as “sides.”  They are:

  • Side A: Covers a corporation’s directors and officers when a company refuses to or is not financially able to indemnify the individuals.
  • Side B: Covers an organization when it indemnifies the directors and officers. Once an organization indemnifies the individuals, this side reimburses the organization. 
  • Side C: Extends the coverage to both the directors and officers and the entity itself. This one is a little more complicated. When the directors and officers and the insured organization are named as co-defendants in a securities lawsuit, this does away with the disputes of coverage allocation. It’s also known as entity coverage.

Policies like these typically cover claims like shareholder suits pertaining to how a company or stocks are performing, pollution, failing to abide by regulations and even cyber liability, as a few examples.    

However, it’s important to look into each policy, as there can be many exclusions, such as fraud or personal profiting.

>>MORE: Where to Find Cyber Liability Insurance / Cyber Insurance

How Much Does D&O Insurance Coverage Cost? 

This type of insurance isn’t like other types, where you may pay around $50 per month for a policy. Because losses when leadership of large organizations get sued can be great, directors and officers insurance can cost in the tens of thousands of dollars.  

D&O insurance can cost from $6,000 to $52,800 in annual premiums. These vary drastically based on the deductible and how much annual revenue a company pulls in.

For small businesses, the median D&O insurance cost is $104 a month or $1,240 a year, according to insureon.

Costs vary across insurance companies. It is advisable to shop around with a few companies to compare quotes. Comparing quotes with digital brokers such as CoverWallet, ez.insure, commercialinsurance.net, or Simply Business is another good idea.     

Learn more about the details of D&O insurance cost

What Benefits Should You Consider for D&O Insurance? 

D&O insurance can operate under some different terminology than other insurance types. For insurance, the deductible is often called retention. But unlike other insurance types, annual premiums tend to go up along with retention levels. 

You’ll also have to assess the payout limits you will need to carry. Directors and officers insurance is interesting in that you can purchase excess limits that increase overall limits. These are usually purchased separately to augment original plans when an insurance company won’t increase limits.  

Do Small Businesses Need D&O Insurance?

At this point, you may be wondering what this all has to do with your small business. After all, many small businesses are not publicly traded, so it’s common to assume D&O insurance does not apply to such small businesses, since they are not exposed to securities class action suits.  

However even privately held companies can still have their directors or officers sued. The lack of shareholders doesn’t preclude lawsuits. In short, if you’re a large enough company to have directors and officers, you’re large enough for directors and officers insurance to apply to you.

Losses from lawsuits against leadership can also potentially bankrupt a business. Foundershield listed costs ranging from $394,000 to $17 million. According to Foundershield, even if you don’t have investors, “Competitors can make allegations such as unfair trade practices, tortious interference or fraud allegations that aren’t covered by a general liability policy.”

Directors and officers insurance can also help attract quality leadership. It may seem counterintuitive. After all, why worry if no one would do anything wrong? But high-quality leaders will take your business more seriously if you make the effort to insure and protect them. Claims can happen even when everyone thinks that they did everything correctly and by the book. All it takes to start a lawsuit is for someone else to think you did something wrong, whether you did or not.

>>MORE: Why do Startups and Small Businesses Need D&O Insurance?

Does Non-Profits Need D&O Insurance? Why?

Similar to for-profit organizations, non-profit organizations that have directors and officers need to have D&O insurance. It helps protects the personal assets of directors and officers from law suits arising from their actions and decisions as directors and officers of the non-profit organizations. In many cases, directors and officers of non-profit organizations may not even realized that they are held accountable personally for the actions of the organizations.

In many cases, D&O insurance helps attract talents to serve as directors and officers for non-profit organizations. It helps them feel confident in their actions and decisions. D&O insurance covers the defense costs, settlements and judgments associated with claims against the non-profit organizations.

>>MORE: Why Do Nonprofits Need D&O Insurance?

How Much does Non-Profit D&O Insurance Cost?

Non-profit D&O insurance isn’t very expensive. The median cost of D&O insurance for non-profit organization is $80 a month, or $960 a year. If you want to save money, make sure you shop around with a few companies to compare quotes before buying. Working with a digital broker like CoverWallet is a good way to compare several quotes in one place conveniently.

What does a D&O insurance policy cover?

D&O insurance covers in the event that someone submits a claim against the leadership of a company when they are serving on the board of directors. Many policies can cover both the corporate entity and the individual leaders.

Is D&O insurance necessary?

If your business has directors and officers, you should consider looking into D&O insurance. When someone tries to sue your leadership or corporation, that’s where D&O insurance can offer protection.  

How much D&O insurance do I need?

Talk to an insurance agent about coverage types and what works for your business situation.  Directors and officers insurance is one of the more complicated types of business insurance out there. You need the right coverage for your situation. For instance, you need to consider sides A, B and C, which affect what is all covered.  

Why is D&O insurance important?

Directors and officers insurance covers the entity and individuals in case a claim is filed against the leadership of the company. A large enough payment in damages could bankrupt companies or individuals. D&O insurance covers this risk.   

What is the Difference between D&O and E&O Insurance?

D&O insurance covers the directors and officers of an organization against claims and law suits believing that they are negligent in their duties as directors and officers of the organization. On the other hand, E&O insurance protects employees of an organization against claims and law suits believing that they are negligent in their acts and performance of duties resulting in errors and omissions.

They are both important. If your business provides services to customers, you need to make sure to have E&O insurance to protect your business and your employees from E&O claims and law suits. If you business or organization is big enough to have directors and officers, you need to have D&O insurance to protect them from law suits arising from duties as director and officers of the organization.

What is the Difference between D&O and Professional Indemnity Insurance?

Professional indemnity insurance, or more commonly referred to as professional liability insurance, covers claims against all professionals believing that they are negligent in the performance of their duties resulting in bodily injuries or property damages. On the other hand, D&O insurance protects the personal assets of directors and officers in claims relating to their actions and decisions while working for the board or the organization. D&O insurance doesn’t cover bodily injuries and property damages.

Final Thoughts

  • Directors and officers insurance protects individuals and entities from lawsuits that target the leadership on the board of directors.  
  • D&O insurance can cost thousands of dollars, since it is usually used to cover large potential losses for companies large enough to have a board of directors.
  • Like any insurance, this type of insurance is dictated by the deductible and payout limit amounts.  
  • Even small, private businesses with directors and officers should consider this type of insurance, since they could get sued, as well.
  • Top five companies to find this type of insurance are Foundershield, Dumont, HUB International, Travelers and AIG.
  • This type of insurance requires talking to an agent or rep to get a quote, since it’s a high-end and complicated insurance type.
Thang Truong
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at realtor.com, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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