Coverage Comparison
Directors & Officers vs. Professional Liability
Both protect against liability claims, but they cover different people for different reasons. Essential reading for founders and executives.
Directors & Officers (D&O)
Protects individual directors and officers from personal liability for decisions they make in their corporate roles.
Protects Against
- Personal assets of directors and officers
- Shareholder lawsuits
- Regulatory investigations
- Employment practices claims
- Breach of fiduciary duty allegations
- Company indemnification costs
Professional Liability (E&O)
Protects the company against claims arising from errors, omissions, or negligence in the professional services it provides.
Protects Against
- The company (not individuals personally)
- Client claims of negligence
- Errors in professional deliverables
- Missed contractual obligations
- Defense costs for service-related claims
Real-World Examples
Directors & Officers (D&O) Claims
- Shareholders sue the board for a failed merger
- The CEO is personally named in a discrimination suit
- A regulatory body investigates executive decisions
- Investors claim the board misrepresented financials
Professional Liability (E&O) Claims
- A client sues because your advice cost them money
- Your work product had errors that caused harm
- You missed a deadline that hurt the client
- The service you provided didn't meet standards
Key Differences at a Glance
When You Need Both
- You have a board of directors AND provide professional services
- Your executives make decisions AND your team delivers client work
- You're raising capital (investors often require D&O)
- You're in a regulated industry with both service and governance risks
Frequently Asked Questions
Do startups need D&O insurance?
Yes, especially if you have outside investors, a formal board, or are planning to raise capital. Investors often require it as a condition of funding. It protects founders personally if things go wrong.
I'm the sole director of my company. Do I need D&O?
If you're incorporated, yes. You can be personally sued for decisions made in your director capacity. D&O protects your personal assets (home, savings) from corporate liability.
Does D&O cover the company too?
D&O has three coverage parts: Side A (individual directors when company can't indemnify), Side B (reimburses company for indemnifying directors), and Side C (covers the company entity itself for securities claims).
Not sure which coverage you need?
Talk to a Summit advisor. We'll review your business and recommend the right combination of coverages.
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