Usually called D&O insurance — is a type of liability insurance that protects a company’s directors, officers, executives, and sometimes the company itself if they are sued over decisions made while managing the organization.

It is commonly used by:

 

• • Corporations

• • Startups

• • Nonprofits

• • Private companies

• • Public companies

• • Venture-backed businesses

The purpose is to protect both:

 

• • the personal assets of executives and board members, and

• • the company’s finances.  

What D&O insurance covers

D&O insurance generally covers lawsuits or claims alleging “wrongful acts” by company leadership.

Typical covered claims include:

1. Mismanagement or bad business decisions

Examples:

 

• • Poor financial oversight

• • Failed mergers or investments

• • Bankruptcy-related claims

• • Breach of fiduciary duty

2. Investor and shareholder lawsuits

Claims that executives:

 

• • Misled investors

• • Hid financial problems

• • Misrepresented company performance

3. Employment-related claims

Examples:

 

• • Discrimination

• • Wrongful termination

• • Harassment

• • Failure to comply with labor laws

4. Regulatory and compliance claims

Defense costs for investigations involving:

 

• • Securities regulators

• • Corporate governance violations

• • Reporting failures

5. Legal defense costs

One of the biggest benefits of D&O insurance is paying:

 

• • Attorney fees

• • Court costs

• • Settlements

• • Judgments

Even if the executives ultimately win the lawsuit.  

Three parts of D&O insurance

Coverage Type	What It Protects
Side A	Personal assets of directors/officers when the company cannot indemnify them
Side B	Reimburses the company when it pays executives’ legal costs
Side C	Protects the company itself in certain lawsuits

What D&O insurance usually does NOT cover

Most policies exclude:

 

• • Fraud or criminal acts

• • Illegal profits

• • Intentional misconduct

• • Bodily injury

• • Property damage

• • Prior lawsuits already known before coverage began

How much D&O insurance costs in mid-2026

D&O insurance pricing varies enormously based on:

 

• • Company size

• • Revenue

• • Industry

• • Whether the company is public or private

• • Claims history

• • Amount of coverage

• • Number of employees

• • Whether outside investors are involved

Typical 2026 costs

Organization Type	Typical Annual Cost
Small private company	$1,000- $3,000
Mid-size private company	$3,000- $10,000
Startup with investors	$2,000 -$15,000
Nonprofit organization	$800- $5,000
Large private company	$10,000 – $50,000
Public company	$50,000- $2M+

Why D&O insurance can get expensive

Premiums rise sharply if the company:

 

• • Operates in finance, biotech, healthcare, or tech

• • Has outside investors or venture capital

• • Is publicly traded

• • Has prior lawsuits

• • Has weak financials

• • Has rapid growth or governance risks

Why companies buy D&O insurance

Businesses often purchase D&O coverage to:

 

• • Protect executives’ personal assets

• • Attract board members

• • Satisfy investor requirements

• • Reduce financial risk from lawsuits

• • Help recruit senior leadership