What is directors and officers insurance?

Leaders of Texas businesses and nonprofit organizations can find themselves in trouble should they take action that negatively affects their business. While it won’t protect against every negative action, directors and officers insurance can help leaders mitigate the risks associated with many of the actions they take.

Directors and officers insurance is specifically tailored to protect the leaders of organizations. Should a leader face legal action due to their role, this insurance may help cover associated costs.

Who might need D&O insurance in Texas?

D&O insurance can prove valuable for individuals occupying leadership roles within organizations in Texas. The insurance can be crucial for leaders in both businesses and nonprofit organizations. Here are some examples of individuals who might benefit from D&O insurance:

  • Presidents and vice presidents
  • Chief executive officers (CEOs) and chief operations officers (COOs)
  • Chief marketing officers (CMOs) and  chief financial officers (CFOs)
  • Directors, board members and chairpersons


If there’s uncertainty as to the necessity of this coverage, a consultation with an insurance agent who specializes in D&O insurance can be helpful. They can provide insight into the risk exposure that leaders face, and assess the need for D&O based on the specifics of leaders’ roles and responsibilities.

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Should volunteer leaders of nonprofit organizations have D&O insurance?

Volunteer leaders of nonprofit organizations, despite not receiving payment for their services, have significant influence over the organizations they serve. If a decision leads to adverse outcomes, these volunteer leaders might face accountability irrespective of their volunteer status.

Although it’s less commonly purchased by nonprofit organizations, many volunteer leaders indeed should consider the protection offered by a D&O policy. An experienced insurance agent is able to assist with determining the usefulness of this coverage.

What types of claims are covered under D&O policies?

The specific claims covered by a D&O policy can vary, depending on the terms and conditions of a policy. Typically, these policies offer coverage for situations such as:

  • Conflicts of interest, whether real or perceived
  • Inappropriate employment-related decisions
  • Poor investment decisions
  • Unauthorized disclosure of confidential information
  • Severe acts of negligence
  • Actions that violate laws
  • Other actions as defined by the specific policy

It’s important to note that D&O policies typically don’t cover poor business decisions due to failure to adapt to changing market conditions. Insurance isn’t a substitute for business acumen.

Moreover, actions that knowingly violate laws are generally excluded. If a leader unknowingly violates a regulation or law, the financial costs may be covered by the policy.

Directors and Officers Insurance Texas

Do D&O policies cover regulatory charges?

Traditionally, D&O policies have not included coverage for regulatory charges assessed by government, quasi-government or industry agencies. Recently, however, some insurance providers have begun to incorporate coverage for such charges.

Leaders who are specifically concerned about regulatory charges should seek advice from an insurance agent who knows D&O policies well. Such an agent can help ascertain whether any available policies offer coverage for this particular risk.

Who typically pays the premiums for D&O policies?

While D&O policies primarily safeguard the interests of leaders, it’s often the organization that covers the cost. This is because the leaders’ potential liabilities are directly connected to their roles within the organizations.

What factors influence the cost of D&O policies?

The cost of D&O policies can vary significantly, influenced by the specific risk profile of a leader or an organization. An independent insurance agent can assist in estimating potential costs. Working with an independent agent allows leaders and organizations to compare policy options from multiple insurance providers.

How can Texas leaders acquire directors and officers insurance?

If you’re a leader seeking directors and officers insurance, reach out to the independent insurance agents at Wise Insurance Group. Our team has a wealth of experience helping Texas organizations and their leaders navigate the complexities of this essential coverage.

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