Directors & Officers (D&O) Insurance
Personal liability protection for the people who lead your organization.
When you serve on a board or in a leadership role, you're personally liable for the decisions you make—even if you're a volunteer. D&O insurance protects directors, officers, and board members from lawsuits alleging wrongful acts in their management capacity. Without it, your personal assets are at risk.
Critical for Non-Profits
Non-profit board members face the same personal liability as corporate directors—but often serve as unpaid volunteers. A lawsuit against the board puts every member's personal assets at risk: their home, savings, retirement accounts. D&O insurance is essential protection for everyone who serves on a non-profit board.
Get a D&O Insurance Quote
Protect your leadership team's personal assets
Understanding D&O Coverage
D&O policies have three distinct coverage parts. Understanding them helps ensure you have the right protection:
Side A Coverage
Direct Protection for Individuals
Protects directors and officers personally when the company cannot or will not indemnify them. This is the most critical coverage—it shields personal assets (homes, savings, retirement) when the organization can't help, such as during bankruptcy.
Side B Coverage
Company Reimbursement
Reimburses the company when it pays to defend or settle claims against its directors and officers. Most claims trigger Side B first, as companies typically indemnify their leaders. This protects the company's balance sheet.
Side C Coverage
Entity Coverage
Covers the organization itself for securities claims (for public companies) or more broadly for private companies and non-profits. When the entity is named alongside individual directors, Side C responds.
What D&O Insurance Covers
Alleged Mismanagement
Claims that leadership made poor business decisions that harmed shareholders, donors, members, or the organization itself. Even good-faith decisions can be challenged.
Breach of Fiduciary Duty
Allegations that directors or officers failed to act in the best interest of the organization or its stakeholders. This is one of the most common D&O claims.
Employment Practices Claims
Wrongful termination, discrimination, harassment, and retaliation claims against individual managers and executives—not just the company.
Regulatory Investigations
Defense costs when government agencies investigate the organization or its leaders. Investigations are expensive to defend, even when no wrongdoing occurred.
Shareholder & Member Actions
Lawsuits from shareholders, members, or donors alleging that leadership decisions diminished value or misused funds.
Creditor Claims
In financial distress situations, creditors may sue directors personally for decisions that allegedly favored one group over another or deepened insolvency.
Who Can Sue? Claims can come from shareholders, members, donors, employees, creditors, regulators, competitors, customers, or vendors. Anyone who believes they were harmed by a management decision can potentially bring a claim.
What's NOT Covered
D&O insurance protects honest mistakes, not intentional wrongdoing:
Important: The policy typically provides defense coverage even for excluded claims until the exclusion is proven. You're defended until wrongdoing is established in court—not just alleged.
Who Needs D&O Insurance?
Any organization with leadership making decisions on behalf of others. If you have a board of directors, officers, or managers who could be held personally liable for business decisions, D&O coverage is essential.
Corporations with Boards
Shareholders can sue directors for any decision that reduces company value
Non-Profit Organizations
Board members often serve without compensation but face full personal liability
Private Companies
Family disputes, partner disagreements, and creditor claims target leadership
Startups & Growth Companies
Attracting quality board members requires D&O protection
Financial Institutions
Heavy regulation and fiduciary duties increase exposure dramatically
Healthcare Organizations
Complex regulations and high-stakes decisions create significant liability
Real Claims Examples
See how D&O insurance protects leadership in real-world scenarios:
Non-Profit Mismanagement Claim
Scenario: A donor sues a non-profit's board members personally, alleging their decision to invest in a failed program wasted charitable funds. Each board member's personal assets are at risk.
Coverage: D&O insurance covers legal defense for each board member ($75,000+), settlement negotiations, and any damages—protecting their homes, savings, and retirement accounts.
Regulatory Investigation
Scenario: The state attorney general investigates a company's executive team over alleged consumer protection violations. No charges are filed, but the investigation takes 18 months.
Coverage: D&O insurance pays the $200,000+ in attorney fees and consultant costs to respond to the investigation, even though no claim was ever filed.
Shareholder Derivative Suit
Scenario: Minority shareholders sue the board of directors, claiming a major acquisition was approved without proper due diligence and destroyed company value.
Coverage: D&O insurance defends each director individually, covers the cost of the lawsuit, and pays any settlement—potentially millions of dollars.
Creditor Action in Bankruptcy
Scenario: After a company files bankruptcy, creditors sue former directors personally, alleging they continued operating when they should have known the company was insolvent.
Coverage: Side A coverage protects directors personally since the bankrupt company cannot indemnify them. Defense and settlement come from the D&O policy, not personal assets.
What Affects Your Premium?
D&O premiums vary significantly based on your organization's risk profile:
Organization Size & Revenue
Larger organizations face more complex decisions and higher exposure
Industry
Financial services, healthcare, and technology face higher premiums due to regulatory scrutiny
Claims History
Prior D&O claims or regulatory actions significantly increase rates
Financial Condition
Companies in financial distress pay more—creditor claims become likely
Governance Practices
Strong board procedures, documented decisions, and compliance programs reduce premiums
Public vs. Private
Public companies face securities litigation risk; private companies often pay less
Typical Range: Small non-profits may pay $1,000-$3,000 annually. Private companies often pay $2,500-$10,000. Larger organizations, those in high-risk industries, or those with claims history can pay significantly more. The only way to know your cost is to get a quote based on your specific situation.
Protect Your Leadership Team
D&O insurance protects the personal assets of the people who lead your organization. Don't let your directors and officers serve without this essential coverage.
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Ryan Parrack Insurance
Serving Elkins, Buckhannon & Northern/Central WV
Elkins, WV