Insurance that protects company directors and officers from personal liability is called D&O insurance.
Directors and officers liability insurance, commonly shortened to D&O insurance, protects individual directors and officers—and sometimes the company itself—against claims arising from alleged wrongful acts in their managerial roles. Such claims can involve allegations of breach of duty, misleading statements, employment-related decisions, regulatory violations, or other errors in corporate governance, depending on the policy.
D&O coverage is often described through three parts. Side A protects directors and officers when the company cannot indemnify them, such as because of insolvency or legal restrictions. Side B reimburses the corporation when it indemnifies its directors and officers. Side C, often called entity coverage, can protect the company itself for certain claims, especially securities-related claims in public-company policies.
D&O insurance is not the same as E&O insurance. E&O generally addresses professional services and client claims, while D&O focuses on decisions made in corporate leadership roles. General liability insurance usually covers bodily injury, property damage, and related liability—not the distinctive management risks faced by directors and officers.