Directors and Officers Liability Insurance (D&O)

Definition - What does Directors and Officers Liability Insurance (D&O) mean?

Directors and officers liability insurance (D&O) refers to liability insurance that covers directors and officers for losses they may suffer in case of a legal action against them. D&O is payable either to the directors or officers or the company itself and generally protects them from claims brought about by customers, competitors, regulators, or business partners.

Insuranceopedia explains Directors and Officers Liability Insurance (D&O)

D&O offers protection against management errors or omissions that may be attributed to the management decisions and policies of the insured. The coverage can extend to defense costs or expenses arising from criminal, civil, or regulatory investigations.

D&O claims vary depending on the nature of the corporation or organization. Claims may be filed by shareholders after financial hardship. It may also be filed by creditors of the company, unsatisfied customers, regulators who have been disobeyed, or competitors for unfair trade practices. In these cases, D&O provides financial protection for the directors and officers as well as the corporation or organization.

D&O liability insurance is often purchased by the company for the benefit of its directors and officers. This type of insurance does not cover illegal acts committed intentionally.

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