There is a common misconception that small business executives do not need Directors and Officers insurance, often called D&O for short, because this type of small business insurance policy is only needed for publicly traded companies.

This is simply not true. Even though privately held small businesses aren’t at risk from lawsuits related to securities, directors and officers can still be personally sued – especially if your business has relationships with customers, vendors, or if you plan to seek venture capital funding at any point in the future. These relationships can put directors and officers at risk, hence the need for D&O insurance.


Another misconception is that general liability insurance and/or umbrella liability policies will cover any claims made against officers and directors of your business. Unfortunately, this is usually not the case. General liability and umbrella policies do not usually cover lawsuits as they relate to management liability.

A third misconception about D&O is that it is only for large companies. Although large companies usually have more officers that could become the target of a liability claim, small businesses usually have officers, and sometimes directors, who can become the target of litigation. It’s for this reason that many insurance companies have started offering small business executive liability insurance to protect the directors and/or officers of your small business.

These are just a few of the common misconceptions about D&O insurance, especially as it relates to small business. A D&O policy will protect your officers from potential litigation costs that could easily cost thousands of dollars. A typical D&O policy covers the legal fees, settlements, and other costs associated with a director or officer being personally sued as a result of performing their duties for the business. Often, newly appointed officers and directors will demand D&O insurance as part of the job offer to protect their personal assets while working in this capacity for your business – no matter how big or small the company is.

If you would like to learn more about how a D&O policy can help protect your business from potentially costly litigation, give Peter a call today at (888) 725-7776 or Get a Free Quote. Our full line of business insurance products ensures that you, your employees, and your business are protected while affording you the peace of mind that only a reputable insurance agent with years of experience can provide.