If you’re a company director, officer, founder, or senior executive, here’s a hard truth: your personal assets can be at risk because of decisions you make at work. Even when you act in good faith, lawsuits can happen. That’s exactly why Directors and Officers (D&O) insurance exists.
Whether you run a startup, manage a nonprofit, or sit on the board of a growing company, D&O insurance isn’t a luxury—it’s a necessity. And if you operate in the USA or the UK, understanding how to get the right coverage is critical.
Let’s walk through everything step by step, in plain English, so you know exactly how to get D&O insurance, what it covers, how much it costs, and how to avoid costly mistakes.
What Is Directors and Officers (D&O) Insurance?
Directors and officers insurance protects company leaders from personal financial loss if they’re sued for alleged wrongful acts while managing the organization.
In simple terms, it covers legal costs and damages when someone claims that directors or officers made bad decisions.
Claims can come from:
- Shareholders
- Employees
- Investors
- Regulators
- Customers
- Competitors
Even if the claim is baseless, legal defense alone can be extremely expensive.
Why D&O Insurance Is Essential in the USA and UK
Both the USA and the UK are highly litigious environments. Corporate governance rules are strict, and expectations for directors are high.
D&O insurance helps:
- Protect personal assets.
- Attract experienced directors.
- Build investor confidence.
- Meet regulatory and contractual requirements.
In many cases, investors or partners won’t even work with a company that lacks D&O coverage.
Who Needs D&O Insurance?
D&O insurance isn’t just for large corporations.
You should strongly consider it if you are:
- A company director or officer
- A startup founder
- A board member
- A nonprofit leader
- A trustee
- A senior executive
Both for-profit and nonprofit organizations in the USA and UK can face serious legal exposure.
What Does D&O Insurance Cover?
While policies vary, most D&O insurance covers three main areas.
1. Management Liability Claims
These include allegations such as
- Breach of fiduciary duty
- Misrepresentation
- Poor corporate governance
- Failure to comply with regulations
- Negligence in decision-making
2. Legal Defense Costs
This is one of the most valuable parts of D&O insurance.
It covers:
- Lawyer fees
- Court costs
- Settlements
- Judgments
Even a single lawsuit can cost hundreds of thousands—or millions—without insurance.
3. Employment Practices Claims (Sometimes Included)
Some D&O policies include or can be extended to cover:
- Wrongful termination
- Discrimination
- Harassment
- Retaliation claims
In both the USA and UK, employment-related claims are very common.
What D&O Insurance Does NOT Cover
It’s just as important to know what’s excluded.
Most policies do not cover:
- Fraud or criminal acts
- Personal profit gained illegally
- Intentional misconduct
- Bodily injury or property damage (covered by other policies)
D&O insurance is about protection—not shielding bad behavior.
Types of D&O Coverage Explained
D&O insurance is usually divided into three “sides.”
Side A Coverage
- Protects directors and officers personally
- Applies when the company cannot indemnify them
- Very important in insolvency situations
Side B Coverage
- Reimburses the company when it indemnifies directors
- Protects the company’s balance sheet
Side C Coverage (Entity Coverage)
- Protects the company itself against certain claims
- Common for publicly traded companies
Most modern D&O policies bundle these together.
How to Get D&O Insurance in the USA
Let’s start with the United States.
Step 1: Assess Your Risk Profile
Insurers will look at:
- Company size
- Industry
- Revenue
- Number of directors and officers
- Claims history
- Financial health
High-risk industries (tech, finance, and healthcare) usually pay more.
Step 2: Gather Required Information
You’ll typically need:
- Company financial statements
- Business description
- Details of directors and officers
- Shareholder structure
- Past or pending lawsuits
Being transparent helps you get better coverage.
Step 3: Work with an Insurance Broker
In the USA, D&O insurance is best purchased through an experienced commercial insurance broker.
A good broker:
- Compares multiple insurers
- Negotiates better terms
- Explains complex policy language
- Tailors coverage to your needs
Step 4: Compare Quotes and Policy Terms
Don’t just focus on price.
Look closely at:
- Coverage limits
- Exclusions
- Defense cost structure
- Retentions (deductibles)
- Policy extensions
Cheapest isn’t always safest.
Step 5: Purchase and Review Annually
Once you choose a policy:
- Review it carefully.
- Update it yearly as your business grows.
- Adjust limits if risk increases.
D&O insurance should evolve with your company.
How to Get D&O Insurance in the UK
The process in the UK is similar, but there are some key differences.
Step 1: Understand UK Legal Exposure
UK directors face risks under laws such as:
- Companies Act 2006
- Insolvency Act
- Health and safety regulations
- Employment law
Regulators like the FCA can also bring actions against directors.
Step 2: Prepare Company Documentation
UK insurers usually require:
- Annual accounts
- Company structure details
- Director profiles
- Claims history
- Risk management practices
Clear governance practices improve insurability.
Step 3: Use a UK Insurance Broker
In the UK, D&O insurance is almost always arranged through brokers.
A specialist broker helps:
- Navigate UK regulatory requirements.
- Structure coverage correctly.
- Secure competitive premiums.
This is especially important for startups and SMEs.
Step 4: Choose the Right Coverage Limits
UK companies often underestimate coverage limits.
Consider:
- Size of potential claims
- Regulatory fines
- Legal defense costs
Higher limits offer peace of mind, especially for growing businesses.
Step 5: Add Extensions Where Needed
UK D&O policies can include valuable add-ons, such as:
- Corporate manslaughter defense
- Regulatory investigation coverage
- Extradition costs
- Crisis management expenses
These extras can make a big difference.
How Much Does D&O Insurance Cost in the USA and UK?
Costs vary widely, but here’s a general idea.
Factors That Affect Cost
- Company size and revenue
- Industry risk
- Claims history
- Coverage limits
- Financial stability
Typical Price Ranges
- Small startups: lower premiums, modest limits
- Mid-sized companies: moderate premiums
- Public companies: high premiums with large limits
In both the USA and UK, premiums can range from a few thousand to six figures annually.
How Much D&O Coverage Do You Need?
There’s no universal number, but consider:
- Value of company assets
- Number of directors
- Likelihood of shareholder claims
- Regulatory exposure
Underinsuring can be just as risky as having no insurance.
Common Mistakes to Avoid When Buying D&O Insurance
Let’s save you some trouble.
Buying the Cheapest Policy
Low premiums often mean:
- Narrow coverage
- Hidden exclusions
- Poor claims support
This can backfire badly during a lawsuit.
Not Covering Past Directors
Make sure the policy includes:
- Past
- Present
- Future directors
This is crucial during leadership changes.
Failing to Update Coverage
Growth brings new risks. If your company scales, raises funding, or expands internationally, your D&O policy should be reviewed.
D&O Insurance for Startups and Nonprofits
Startups and nonprofits often assume they don’t need D&O insurance. That’s a mistake.
- Startups face investor and shareholder lawsuits.
- Nonprofits face governance and employment claims.
In fact, many board members won’t serve without D&O coverage.
Why Directors Personally Should Care
Even if your company promises indemnification, that protection can disappear if:
- The company becomes insolvent.
- Legal costs exceed reserves.
- Laws prevent indemnification.
D&O insurance is often the last line of defense for personal assets.
Conclusion
Getting directors and officers insurance in the USA and UK is not complicated—but it does require thought, planning, and the right advice. D&O insurance protects your personal assets, strengthens corporate governance, and gives directors the confidence to make smart decisions without fear of personal ruin. Whether you’re running a startup, managing a nonprofit, or leading an established company, the right D&O policy is a powerful safeguard. When structured correctly, it’s not just insurance—it’s peace of mind.