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Directors and officers insurance
Coverage that supports your leaders and decision makers
What is directors and officers (D&O) insurance?
Directors and officers insurance is a type of professional liability coverage that protects the people who guide a company's policies and actions. These leaders can be held responsible for what they do on behalf of the organization, which means their personal assets could be at risk in a lawsuit. D&O coverage supports your directors and officers as they make important decisions, and it also helps protect businesses from claims challenging how the company is managed.
When you choose Progressive Commercial for D&O coverage, you get a team that understands the risks business leaders face. We work with trusted carriers and experienced specialists to help you find a policy that fits your needs. You'll also have the confidence of working with a company that's supported millions of small business owners. Start a quote online or speak with an insurance expert.
Who needs D&O insurance?
Many organizations rely on their leaders to make important decisions, which can invite scrutiny or legal challenges. That's why groups of all sizes look to D&O insurance for extra protection. Whether you have a startup, manage an S corp, or run a nonprofit, it's important to protect against claims of mismanagement, breach of duty, and more. The following entities can benefit from D&O insurance coverage:
- Private companies
- Public corporations
- Nonprofits
Protecting your management team matters. Call us or start a quote online to learn more about getting D&O insurance through Progressive Commercial.
Shrinking limits for D&O insurance
Directors and officers liability insurance can work differently from other kinds of liability coverage because of something called shrinking limits. Policies like general liability typically separate defense costs from damage payouts. D&O insurance usually doesn't. This means that the money spent on defense, like legal fees, can leave less for damages or settlements after judgment.
What does D&O insurance cover?
D&O insurance helps protect company leaders when they're accused of making harmful or improper decisions while running the business. These claims can come from many places, including vendors, partners, or investors. A D&O policy typically covers situations related to:
- Breach of fiduciary duty (e.g., misuse of funds)
- Failure to follow company bylaws
- Reporting errors or lack of documentation
- Improper hiring or removal of board members
- Defamation by a board member
- Misrepresentation of company finances or services
What isn't covered by directors and officers liability insurance?
D&O insurance offers important protection, but it doesn't apply to every situation. Like most liability policies, it only covers unintentional or negligent actions. It doesn't protect directors or officers when they knowingly break the law or act outside the company's best interests. Most D&O policies exclude:
- Fraud
- Criminal acts
- Deliberate wrongdoing
Internal disputes may also be excluded, depending on your policy's terms and conditions. It's important to review your coverage to understand what is and isn't protected. If you still have questions, reaching out to a trusted insurer like Progressive Commercial is a good place to start.
Types of D&O insurance coverage
Most D&O insurance policies contain three coverages. Side A protects the leaders themselves, Side B helps pay the company back when it supports them, and Side C protects the company if it gets sued for these management decisions.
Side A coverage
Side A coverage protects individual directors and officers. Many businesses contractually promise to support leaders if they face legal trouble. This is called indemnification. But sometimes a company can't help because of laws or financial limits.
If the company can't indemnify its leaders, Side A coverage on a D&O insurance policy can help. It pays the officer's defense costs, settlements, or judgments when they're accused of wrongdoing or negligence.
Side B coverage
Side B coverage reimburses a business when it indemnifies its leaders. It helps make sure the company isn't solely responsible for legal costs when there's a claim against its directors and officers.
Side C coverage
D&O coverage can also protect the company itself if it's named in a lawsuit. This often happens when a claim is brought against business leaders. Side C pays for company losses, even if the directors and officers don't face a personal financial loss. This part of the policy is also known as entity coverage.
How can directors and officers reduce risk?
It's always better to prevent company problems before they happen. Businesses can reduce their risk by putting strong policies in place and following them consistently. Best practices for reducing D&O claims include:
- Keeping bylaws updated and well documented
- Following formal election and removal processes
- Consulting legal or financial experts when needed
- Maintaining transparency in reporting and communication
- Handling interpersonal issues professionally and with positive intent
These steps can help lower the chance of legal action and demonstrate responsible leadership.
FAQs about D&O insurance
How does D&O insurance work?
D&O coverage is usually written on a claims-made basis, meaning it applies only to claims filed while the policy is active. This is common practice for professional liability insurance.
What factors affect the cost of D&O insurance?
D&O insurance rates reflect the level of risk your leaders and business face. Insurers look at how your company operates and who it serves. Typical cost factors include:
Industry and business type
Company size and revenue
Number of employees and directors
Claims history
Coverage limits and deductibles
Learn more about the cost of professional liability insurance and start a quote to get your exact price.
What do mergers and acquisitions have to do with D&O insurance?
Mergers and acquisitions can create extra risk for company leaders because large deals face more scrutiny and can be opposed by shareholders. In fact, according to the American Bar Association, there are an average of three lawsuits per challenged deal. During these high-pressure moments, D&O insurance can protect company leadership when they're named individually in a legal claim.
Why choose Progressive Commercial for your D&O insurance
We make it easy for customers to get protection tailored to their unique needs. For more than 50 years, we've helped businesses like yours secure the right insurance coverage. Our customers trust us to provide flexible options, competitive rates, and expert service. You can learn more about getting D&O insurance through Progressive Commercial by calling us or starting a quote online.
