An investor sues a startup's board for misrepresentation of financials during a funding round. A terminated employee brings a wrongful termination claim against the CEO personally. A creditor sues a nonprofit's board members individually for breach of fiduciary duty after the organization becomes insolvent. In each one the question is not whether the company is insured. It is whether the company can still stand behind the person named.
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ContinuePolicy structure
Most D&O policies are written in three parts, and each part answers a different scenario. Which one responds decides whether a limit that looked adequate on the schedule is adequate in the room.
Covers directors and officers directly when the company cannot or will not indemnify them. This is the most critical layer for an individual board member, because it responds exactly when personal assets are most exposed.
Reimburses the company when it indemnifies a director or officer for a covered claim. Most companies have bylaws or agreements requiring them to advance defense costs, and Side B makes the company whole after it does.
Covers the company itself for claims brought against it. On private company and nonprofit policies Side C can reach many kinds of wrongful act claim against the entity, not only securities ones.
Any actual or alleged act, error, omission, misstatement, misleading statement or breach of duty committed in a leadership capacity. The breadth of that definition is the point of the cover rather than a technicality in it.
The policy pays to defend the claim whether or not the allegation is ultimately proven. D&O earns its keep long before a case resolves, because most of them never do.
The policy in force when the claim is made responds, not the one in force when the conduct occurred. That single fact is what makes renewal continuity a structural question rather than an administrative one.
The sixth of those is the one that reaches back into last year's paperwork. This cover is claims-made, so the policy in force when a claim is MADE responds rather than the one in force when the conduct happened, and the mechanics of that form are set out in how a claims-made policy responds rather than repeated here. What belongs on this page is the consequence at renewal, which is that the stack a business actually starts with has to be assembled so the dates line up across every form in it.
Who needs it
Any organisation whose leadership makes decisions affecting investors, employees, creditors, regulators or the public carries this exposure. What changes between them is who brings the claim, and whether anyone is left to indemnify.
Investors frequently require this cover as a condition of funding, and directors ask for it before taking a seat.
Three more buyers sit outside the four above, and each is really a contract question rather than a different programme. Companies with institutional investors or lenders, where this is a covenant in the credit agreement and a standard condition of PE-backed investment. Professional services firms where partners make decisions affecting clients, employees and capital. And any board recruiting an outside director, because increasingly the candidate asks before accepting the seat.
The cover answers claims about decisions. What it does not answer is anything physical, anything already known, and most of what an employee brings against the organisation rather than against a person.
Four claims against one organisation, and which policy each one lands on:
Covered: An investor alleges the board misrepresented financials. A wrongful act claim, defended from the first dollar of cost.
Not covered: A visitor is injured at the company's premises. That is general liability, and it has nothing to do with a decision.
Covered: A creditor sues board members individually after insolvency. Side A, which is the only side still standing once the company cannot indemnify.
Not covered: A discrimination claim brought against the organisation. That is employment practices liability, a separate policy with its own form.
The pattern is worth naming. This is a cover for decisions and for the people who made them, and the further a claim travels from a decision, the more likely it is that a different policy owns it. Where a counterparty wants evidence that the cover exists at all, what your contract asks the certificate to say decides whether what you send satisfies them.
The gaps
A few exclusions that appear in real policies and carry real consequences, plus two the market has been adding to nonprofit forms this year. Eight that matter.
WHAT YOU NEED
Defense costs paid until adjudication. The cover funds the defence right up to the point a court finds the conduct deliberate, and then it stops.
WHAT YOU NEED
General liability. Nothing physical belongs on this form, regardless of whose decision caused it.
WHAT YOU NEED
Retroactive date continuity, tracked at renewal. Something you already knew about is not a claim the new policy agreed to take on.
WHAT YOU NEED
Carve-backs for derivative suits, read rather than assumed. Without one, a shareholder action brought in the company's name can fall outside the form.
WHAT YOU NEED
Employment practices liability, as a separate policy. This form may answer for the individual and still not answer for the organisation.
WHAT YOU NEED
The fine itself is generally uninsurable. Defense costs are typically covered, and on a regulatory matter the defence is usually the larger number.
WHAT YOU NEED
Cyber liability. Carriers have been adding broader cyber exclusions to nonprofit forms, so what the prior-year policy covered may not be in the renewal.
WHAT YOU NEED
Professional liability. The same narrowing has been applied to professional services wording, which matters for any nonprofit or advisory body that also delivers a service.
The last two are new rather than structural, and together they are the argument for reading a renewal form instead of accepting it. Carriers have also been narrowing antitrust coverage in nonprofit wordings. What was in last year's form is not automatically in this year's, and where the gap that opens is a data one the answer is cover for a breach of client data rather than a broader D&O limit.
The structure
The three-part structure looks like a diagram and behaves like a hierarchy of desperation. Each side answers a different question about who is left standing to pay, and they matter in almost exactly the inverse order to how often they get discussed.
It covers directors and officers directly, in the specific situation where the company cannot or will not indemnify them: bankruptcy, insolvency, or a simple refusal. That is exactly the scenario in which a director's personal assets are exposed, and it is the scenario nobody models when the limits are set. A shared limit that looked generous while the company was solvent is the limit several defendants are now arguing over.
It reimburses the company after it indemnifies a director for a covered claim. Most organisations have bylaws or agreements obliging them to advance defense costs, so in practice the company pays first and the policy makes it whole afterwards. This is the ordinary path, and because it works quietly it is the reason people assume the structure is simpler than it is.
It covers claims brought against the entity, and on private company and nonprofit forms it can reach many kinds of wrongful act rather than only securities matters. Public company Side C is narrower and focused on securities litigation and shareholder suits. The practical consequence is that the entity and the individuals frequently share one limit, so a large entity claim can erode the cover the directors were relying on.
The three sides also explain why limit adequacy is never a single number. It is a question about who is likely to be sued, whether the company will still be able to indemnify them, and how much of the limit the entity might consume first. We read the structure rather than the headline limit, and we read it against how a claims-made policy responds, because on this cover the date and the structure fail together.
Speak to our teamBoard check
Each line below changes what a D&O submission has to carry or evidence. Nothing here is priced and nothing here is a quote.
What the submission has to evidence
Tick what describes your board and the cover it implies appears here.
Bring last year's policy and this year's quote side by side. On this cover the difference between the two forms is usually where the conversation actually is, and in the current market it is rarely in your favour by default.
Speak to our teamCost
Premium depends on the organisation rather than on a flat rate, and in this class the market conditions of the year you happen to renew in matter more than they do almost anywhere else.
A venture-backed startup, a private company with an outside board, a nonprofit and a public company are four different underwriting exercises rather than four points on one scale.
Prior litigation moves the rate, and demonstrable governance practice moves it the other way. In this class underwriters read the minutes as well as the loss runs.
The benchmark most organisations start from is a share of revenue or assets, and the limit chosen against it is the single largest structural input on the submission.
An imminent or recent liquidity event raises both the likelihood and the size of a claim, and carriers price the period rather than the event itself.
Organisations serving children, mental health and housing populations face additional scrutiny, and nonprofits with significant federal funding are being asked more at renewal.
The private company and nonprofit market has been relatively soft, with new entrants creating competition and flat to decreasing rates for clean risks, while terms have quietly narrowed at the same time.
Three marks is an input that moves a D&O premium more than the others here. It is a relative weighting drawn from how carriers rate, not a rate and not a quote.
A common starting point is coverage equal to 1% of annual revenue or total assets, whichever is greater, with a minimum of $1M. That benchmark is a floor, not a recommendation. Private companies with institutional investor boards, active transaction exposure or prior litigation history should be at the higher end of their peer range, and should get there before a transaction process begins rather than during one.
Talk to an expertProcess
We understand your business first, then take it to the carriers who want to write it. An advisor walks you through the options and what they cost. No two files are the same, so what follows is the shape of a placement rather than a script.
What kind of organisation this is, who sits on the board, what the governance practice looks like and what the loss history says. Carrier appetite in this class varies more by entity type than by size, so those answers decide which markets will look at the file at all.
This is a specialty class and admitted markets are selective, so higher-risk entity types go to E&S markets and London capacity rather than to whoever quoted last renewal. An advisor explains what came back and where the forms differ.
Side A, B and C structure, insured versus insured carve-backs, retroactive date alignment, antitrust scope and EPLI exclusion language, compared across every quote before you see them. We also handle how COIs get issued for the lenders and counterparties who want proof before closing.
Claims alleging a wrongful act by someone acting in a leadership capacity: an act, error, omission, misstatement or breach of duty. It pays to defend the claim whether or not the allegation is ultimately proven.
Side A covers individuals directly when the company cannot or will not indemnify them. Side B reimburses the company when it does indemnify. Side C covers the organisation itself as a defendant.
Volunteer status does not reduce legal exposure, and there is no salary to offset the personal risk of a lawsuit. For many strong candidates the coverage is what makes a board seat acceptable.
A common starting point is 1% of annual revenue or total assets, whichever is greater, with a minimum of $1M. Treat it as a floor rather than an answer, particularly with an outside board or a transaction ahead.
The retroactive date has to match your prior policy's inception. If the new carrier sets a later one, conduct from prior years can be uncovered, and that is the most common coverage failure in D&O placements.
Against an individual it often responds. Against the organisation it generally does not, and that is employment practices liability, a separate policy arranged alongside this one.
The fine itself is generally uninsurable. Defense costs are typically covered, and on a regulatory matter the defence is usually the larger of the two numbers.
Investors frequently require it as a condition of funding, and directors joining the board will ask whether it is in place before accepting a seat. It is far easier to arrange before the round than during it.
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Whether you are placing D&O for the first time or reviewing limits before a transaction, we submit across specialty markets including E&S and London capacity, and we compare the wording across every quote rather than the price alone.
