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Compare directors and officers liability insurance quotes (D&O)

Directors and officers can be held liable for their actions at work. Protect your employees and yourself with a D&O insurance policy today.

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What is directors and officers insurance?

Matt Hands

Directors and officers liability insurance is a type of business insurance that protects companies financially if a director or officer is held legally liable for their actions (e.g. employee malpractice, reporting error). Whether you operate in the non-profit, public, and private sector, having a D&O insurance policy can cover the cost of legal fees and compensatory damages, allowing you to protect your business financially for the long run. 

Directors and officers insurance can also be referred to as:

  • D&O insurance
  • D&O liability insurance
  • Directors liability insurance
  • Directors and officers liability insurance
  • Board of directors liability insurance 
  • A type of management liability insurance 

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Who needs directors and officers liability insurance?

A common misconception is that only large corporations need directors and officers liability insurance. However, small businesses and privately held companies are not immune to expensive claims just because there are fewer shareholders. In fact, small business owners can face more financial burden from a lawsuit against its directors and officers if they lack the resources and preparation. 

Therefore, if your business has a corporate board, board of directors, or an advisory committee, consider adding D&O liability insurance to your commercial policy. You don’t need to be making millions to face a lawsuit against your actions as a manager. This includes businesses in the public, private, and non-profit sectors.

Examples of directors and officers insurance (D&O) claims

  • Bankruptcy

    After your business files for bankruptcy, you’re held personally liable for the unpaid wages of your employees.

  • Employee allegations

    Several employees claim your management team created a hostile work environment, violated regulations, and delivered poor governance.

  • Financial misrepresentation

    Investors hold your board of directors liable after your business reports its financial state on an income statement incorrectly.

What does D&O insurance cover?

A directors and officers liability insurance package covers the cost of legal fees and other costs associated with a lawsuit (e.g. losses, indemnification), against a director or officer of your business. This can include: 

  • Alleged claims of employment malpractice
  • Inaccurate disclosures
  • Regulation violations 
  • Errors in reporting
  • Breaches of fiduciary duty
  • Poor corporate governance

Insurance companies typically offer D&O liability policies with three different clauses: Side A, Side B, and Side C.

Side A: Directors and officers liability


Side B: Company reimbursement


Side C: Entities coverage


The average cost of D&O insurance

The cost of D&O insurance varies according to the circumstances of each business, but you can expect to pay between $5,000 to $10,000 annually for $1 million in coverage. Smaller, low-risk businesses could see premiums as low as $500 each year for directors and officers liability insurance.

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Factors that go into your directors liability insurance quote

  1. Business industry

    Your risk level varies according to the type of business you operate. So if your business is at a low-risk of making a D&O claim (e.g. small startups), your directors and officers insurance premium will be lower. High-stake businesses, such as large public corporations with many managers, face higher costs each month for a D&O policy, simply due to the increased likelihood of a lawsuit.

  2. Number of employees

    The larger your company is in size, the more expensive your D&O insurance policy will be. Having more employees means there are more chances of a mistake being made. Anyone on your board of directors or advisor committee could breach their fiduciary duties or report an error, causing an expensive claim for your insurer to deal with.

  3. Experience

    The more experience you have in your industry, the less you’ll be paying for your directors liability insurance. As a seasoned professional, you can show insurers that you’re competent in doing your job without issues arising. On the other hand, if you lack the job experience, you may be paying higher premiums for a while.

  4. Revenue and financial position

    Bringing in high revenues typically increases your D&O quote because third parties (e.g. employees, investors) can ask for more in compensation during a legal battle, knowing the business revenue is sustainable. However, if your business is in a good financial position, meaning you probably won’t go bankrupt, insurance companies can also lower your premium due to the reduced likelihood of a bankruptcy claim.

  5. Business insurance history

    Your business insurance history plays a large role in determining your D&O insurance quote. If you have a clean, claims-free history, insurers can offer a lower price as it shows you’ve been historically responsible with your business. Having several claims in the past, however, can increase your premium as it shows you're likely to make another one.

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Frequently asked questions: D&O insurance

Do nonprofits need D&O insurance?


What’s the difference between E&O and D&O?


What doesn’t D&O insurance cover?


Does D&O protect former directors and officers?


Matt Hands, Business Director of Insurance

With 6+ years of experience at Ratehub.ca, Matt’s focus has been on growing its newest business unit, Insurance. He is a thought leader and a valuable resource to respected publications across Canada. read more

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