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D&O insurance: Get directors and officers liability insurance

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

How to get business insurance with

  1. Share information

    Tell us a little about your business operations and your coverage needs.

  2. Connect with an expert

    We'll connect you with our small business insurance partner to finalize all the details on your policy.

  3. Secure your coverage

    Bind your customized, affordable coverage – so you can grow your business with peace of mind.

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What is D&O insurance?

D&O insurance, which means directors and officers liability insurance, is a form of business insurance coverage 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. 

This product has many names and you may see it referred to as:

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

Who needs D&O liability insurance coverage?

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.

What does a directors and officers insurance policy 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

How much is directors and officers insurance?

The cost of D&O insurance coverage varies according to the circumstances of each business, for mid to large scale businesses 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 coverage.

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

There are many different instances in which a D&O policy can come in handy – here, we cover three different examples of directors and officers insurance claims, so you can better understand the potential coverages on your plan.

  • 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 factors impact a directors liability insurance quote?

Just like any other form of insurance, there are number of factors that an insurance company will consider as part of their rating process. Insurers will weigh current industry and market conditions along side the specifics of your business and coverage needs to determine a quote for your individual D&O policy.

  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 / Age of Business

    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.

Get a free D&O liability insurance quote.

Our qualified brokers are standing by to help you craft the right D&O policy to suit your needs. Request a free quote and consultation today.

Frequently asked D&O insurance questions

Does D&O insurance have a deductible?

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?

Does D&O insurance cover breach of fiduciary duty?

Is a D&O insurance policy tax deductible?