Directors & Officers (D&O) Insurance – A Guide

The type of exclusions will depend on the policy. However, some common exclusions found in D&O insurance policies may include:

Existing claims – a new policy typically won’t cover an ongoing claim. It’s best not to change your policy while dealing with a claim.

Pre-known circumstances – similarly, if you are aware of circumstances that may be the subject of a potential claim, a new policy won’t cover it and you’ll usually need to sign a declaration stating you don’t know of any potential claims.

Catastrophic hazards – policies won’t cover certain ‘catastrophic’ events, where the insurer could not realistically cover the cost of claims. This includes damage resulting from war, acts of terrorism or natural events. This type of exclusion is common in many policies. 

Conduct – if claims are made as a result of a person’s fraudulent or criminal conduct (e.g. embezzlement), they will not be covered. Insurers will usually pay defence costs (under the presumption of innocence), but once a guilty verdict has been reached, cover will end. 

Major shareholder claims – some policies exclude protection from shareholder claims if the shareholder owns over a certain percentage of the business.