Insurance Curator Directors and Officers (D&O) liability insurance protects corporate leaders and the company against claims arising from managerial decisions. In the United States—especially in hubs like New York City, San Francisco, Los Angeles, Chicago and Houston—D&O exposures are concentrated around three claim types: securities litigation, fiduciary (ERISA) claims, and employment-related claims. This article explains what each claim type typically covers, how D&O responds, common exclusions and practical cost examples from major carriers and markets.
Quick overview: Sides of D&O coverage
Before diving into each claim type, recall the common structure:
- Side A: Protects individual directors and officers when the company cannot indemnify them.
- Side B: Reimburses the company when it indemnifies directors/officers.
- Side C (Entity Coverage): Covers claims against the company itself (often used in securities claims against public companies).
For deeper context on differences, see Side A vs Side B vs Side C: Which Coverage Matters Most in Directors and Officers (D&O) Liability Insurance?.
1) Securities claims: scope, triggers and typical response
Securities claims arise from allegations made by shareholders, investors or regulators that directors/officers made false/misleading statements or failed to disclose material information.
What’s typically covered
- Allegations of misstatements or omissions in SEC filings, IPO prospectuses, quarterly/annual reports.
- Claims of insider trading, market manipulation or misleading guidance (subject to exclusions for fraud).
- Shareholder derivative suits pursuing recovery against directors/officers for alleged breaches of fiduciary duty that harmed shareholders.
What insurers pay for
- Defense costs (attorney fees), settlements and judgments up to the policy limit.
- For public companies, Side C limits are commonly used for direct securities class actions.
Common exclusions and limitations
- Fraud/intentional wrongdoing: Most policies exclude proven fraudulent acts by an insured person.
- Prior acts and known circumstances: Claims arising from facts known before inception are excluded unless negotiated.
- Regulatory fines in some jurisdictions: Some regulators’ civil penalties may be excluded or require carve-outs.
Market and pricing signal (U.S. examples)
- Public-company securities D&O costs are highly variable. According to Aon and Marsh market updates, U.S. public company D&O renewal rates increased notably during market volatility and periods of heightened securities litigation (see Aon and Marsh links below).
- Example ranges: a small public company might pay $50,000–$150,000+ annually for modest limits; large public companies commonly pay six-figure premiums. (Source: Aon D&O market commentary; Marsh market reports)
See more on legal scope at Securities Litigation Coverage Under Directors and Officers (D&O) Liability Insurance: Scope and Limits.
2) Fiduciary (ERISA) claims: what’s different
Fiduciary claims typically arise from plan participants alleging mismanagement of employee benefit plans (401(k), pension), violation of ERISA duties, improper investment selection, or excessive fees.
What’s typically covered
- Alleged breaches of ERISA fiduciary duties by directors, officers or trustees overseeing employee benefit plans.
- Defense costs and settlements tied to plan participant lawsuits.
Overlap and gaps with D&O
- Many D&O policies exclude fiduciary liability by default, requiring:
- A separate fiduciary liability policy (commonly sold alongside D&O), or
- A D&O endorsement adding fiduciary coverage (often limited).
- Some carriers offer combined solutions (D&O + fiduciary) with shared or separate limits.
Why state and industry matter
- Companies with in-house defined-benefit plans or significant employee stock ownership (e.g., tech firms in California and New York) face heightened fiduciary exposure.
- Litigation frequency and statutory damages under ERISA can drive significant defense and settlement costs.
For a detailed analysis of overlaps and gaps, read Fiduciary Exposure and Directors and Officers (D&O) Liability Insurance: Overlaps and Gaps.
3) Employment-related claims and D&O: when they apply
Employment claims often originate from employees alleging wrongful termination, discrimination, harassment, retaliation or wage-and-hour violations.
How D&O and Employment Practices Liability Insurance (EPLI) interact
- EPLI is the primary product for employment claims—covers the company as well as individual managers.
- D&O can respond for claims specifically against directors/officers alleging wrongful acts in their managerial capacity (e.g., personally responsible for discriminatory policy).
- Some D&O forms contain narrow employment wrongful act definitions; others explicitly carve out employment claims, leaving coverage to EPLI.
Typical claim triggers where D&O may respond
- Claims alleging board-level decisions or policies that directly caused employment harm.
- Shareholder derivative claims tied to alleged systemic employment law failures (e.g., company-wide harassment culture causing reputational loss).
Retention and limits
- Middle-market firms often see retentions of $25,000–$100,000 for EPLI and D&O; larger firms have higher deductibles but broader limits.
Further reading: Employment Practices and D&O: When Employment Claims Fall Inside or Outside Directors and Officers (D&O) Liability Insurance.
Comparative snapshot: Securities vs Fiduciary vs Employment (D&O perspective)
| Claim Type | Typical Plaintiffs | D&O Response | Common Exclusions | Typical Use of Policy Limits |
|---|---|---|---|---|
| Securities | Shareholders, SEC | Side A/B/C for individuals/company; defense & settlements | Fraud, insured vs insured without carve-back | Frequently consumes large portion of limits for public co. |
| Fiduciary (ERISA) | Plan participants | Only if fiduciary endorsement included; otherwise separate fiduciary policy | ERISA statutory penalties may be limited | Moderate to high depending on plan size |
| Employment | Employees, EEOC | Limited—EPLI primary; D&O for managerial-level allegations | Wage/hour and bodily injury; criminal acts | Usually smaller than securities but can be material if systemic |
Cost examples and carrier notes (U.S. market focus)
Premiums depend on company size, industry, revenue, public vs private status, claim history and state law exposures (Delaware incorporation or heavy activity in California/New York can raise rates).
Representative pricing (U.S., 2024 market context; illustrative ranges):
- Small private company (revenue < $10M), $1M limit:
- Hiscox / small-market carriers: $500–$2,000/year (Hiscox lists small-business D&O starting near $479/year on their U.S. product pages) — see Hiscox source below.
- Major carriers (Chubb, AIG, Travelers): $2,000–$7,500/year depending on underwriting.
- Middle-market private company ($50M revenue), $5M limit:
- Typical premiums: $25,000–$75,000/year, higher in industries with frequent securities or employment claims (tech, healthcare, finance).
- Public companies:
- Small-cap public: $50,000–$150,000+
- Large-cap/mid-cap: $150,000–$1,000,000+
- Multi-national or high-risk sectors: multi-million-dollar premiums.
Carriers to watch:
- Chubb — strong in middle-market and large public D&O placements.
- AIG — broad appetite for complex securities and side-A placements.
- Travelers — active in middle-market D&O.
- Hiscox — focused on small business/SMB D&O products and competitive entry pricing.
Market commentary and data: see Aon and Marsh for broader trends and median premium movements in the U.S. market:
- Aon D&O insights: https://www.aon.com/ (search “D&O Insurance” for current market updates)
- Marsh D&O analysis: https://www.marsh.com/ (search “Directors and Officers Insurance”)
Hiscox small-business D&O product (U.S.): https://www.hiscox.com/small-business-insurance/directors-and-officers-insurance
Practical steps for U.S. companies (New York / California / Texas focus)
- Review existing D&O form to confirm Side A/B/C split and employment/fiduciary carve-outs.
- Purchase a separate fiduciary liability policy if managing employee benefit plans.
- Layer limits for public companies: combine primary D&O with excess layers or a Side A-only tower for executives.
- Benchmark quotes from multiple carriers (Hiscox for SMBs; Chubb, AIG, Travelers for middle-market/public).
- Work with brokers experienced in Delaware, California, and New York litigation climates to structure retentions and defense provisions.
Conclusion
D&O liability insurance in the U.S. must be tailored to the specific exposures of securities claims, fiduciary (ERISA) actions and employment-related suits. Understanding how D&O interacts with EPLI and fiduciary policies—and where Side A/B/C apply—is essential to avoid gaps. For practical guidance on selecting forms and endorsements, consult comparative resources such as Comprehensive Guide to Coverage Types in Directors and Officers (D&O) Liability Insurance and consult experienced brokers for market-specific pricing.
External sources and further reading
- Hiscox — Directors & Officers Insurance (U.S. small business product): https://www.hiscox.com/small-business-insurance/directors-and-officers-insurance
- Aon — D&O market insights and commentary: https://www.aon.com/
- Marsh — Directors and Officers insurance resources and market analysis: https://www.marsh.com/