Directors and Officers Liability

Definition

Directors and officers (D&O) liability insurance protects the people who run a company, association or nonprofit. It often protects the organization too. It covers claims that leaders made wrongful management decisions. It typically pays defense costs, settlements and judgments that general liability doesn't cover.

In Plain English

D&O claims are about mismanagement, not injuries or property damage. So a general liability policy usually won't respond. In real estate, claims can come from investors in a property partnership, lenders or regulators. They can also come from owners in a condo or property owners association.

Most D&O policies are claims-made. The policy in force when the claim is made responds, if the wrongful act happened after the retroactive date. Defense costs are often inside the limit. That means legal fees reduce what is left for a settlement.

Private company D&O policies often bundle employment practices liability and fiduciary coverage. If your company raises money from investors for property deals, ask whether investor claims are covered or excluded.

Not sure how your policy handles this? Have us review it, or get a quote.

Example

Hypothetical and simplified: Investors in a real estate partnership sue the managers, claiming they overpaid for a property and hid needed repairs. The defense costs $200,000 before the case settles for $300,000. A D&O policy with a $1 million limit may pay both, subject to its retention and exclusions, leaving $500,000 of limit for the rest of the policy period.

What to Watch For

Ask whether claims by investors, lenders or co-owners are covered or excluded.
Check whether defense costs reduce the limit.
Look at the retroactive date and make sure it reaches back to when your company's activities began.
Confirm who counts as an insured, such as managers, members, employees and the entity itself.

Last updated October 14, 2026 · Primesure editorial team · How We Write