Board governance glossary
Definition
What is Directors and officers insurance (D&O)?
Directors and officers insurance is liability coverage designed to protect an association and its board members against certain claims arising from governance decisions and alleged wrongful acts.
What it means in practice
A D&O policy may cover defense costs, settlements, or judgments for covered claims such as alleged breach of fiduciary duty, mismanagement, or errors in board service. Coverage varies substantially by insurer, policy form, endorsements, deductibles, and whether defense costs reduce the policy limit.
D&O insurance generally contains exclusions and does not replace careful governance. Boards should review actual policy language with a qualified broker or coverage professional instead of assuming every board-related dispute is covered.
Key points for boards
- Confirm who is insured, including former board members and volunteers.
- Review exclusions, limits, deductibles, and defense-cost treatment.
- Understand when and how a potential claim must be reported.
- Reassess coverage as the association’s size and risk profile change.