LIABILITY INSURANCE
Directors’ and officers’ liability (D&O) definition
Directors’ and officers’ liability insurance protects company directors and officers against claims alleging negligence, breach of duty, or wrongful acts.
In practice, this means a type of cover that insures directors and officers of companies for claims brought against them on the grounds of negligence, breach of duty or a wrongful act. Such claims are most commonly brought by employees and stockholders who have incurred financial losses. This gives insurers, brokers, reinsurers and risk managers a shared way to discuss the concept when reviewing policies, claims, regulation or market data.
This term is especially useful in liability insurance, claims handling and policy wording. It helps assess legal responsibility, claim response and protection against third-party or employee claims. It also helps users compare how insurance is structured, regulated, priced or claimed across different markets.
Directors’ and officers’ liability (D&O) is closely related to liability insurance, management liability, professional liability and wrongful act. Linking these concepts together helps build a clearer glossary structure and gives readers a stronger understanding of how individual insurance terms connect within wider international insurance practice.
At a glance
- Used in
- Liability insurance, claims handling and policy wording.
- Purpose
- Helps assess legal responsibility, claim response and protection against third-party or employee claims.
- Important because
- Clear definitions support better comparison of insurance products, market practices and regulatory requirements across jurisdictions.
- Related terms
- liability insurance, management liability, professional liability and wrongful act.
Example of directors’ and officers’ liability insurance
Shareholders allege that company directors made decisions that caused financial loss. Directors’ and officers’ liability insurance may cover defence costs and certain damages.