Insurance Curator Directors and Officers (D&O) liability insurance protects corporate leaders from personal losses if they are sued for alleged wrongful acts while managing a company. Standard D&O policies provide core protections, but many organizations — particularly in the U.S. markets such as New York, San Francisco, Chicago and Austin — require supplemental coverages to close gaps created by modern regulatory, employment and cyber risk trends. This article reviews the most common D&O extensions, what they cover, typical cost ranges for U.S. small-to-mid-size companies, and when to consider each add-on.
Why add supplemental coverages to D&O?
- Broaden protection where the base D&O form excludes certain claim types (e.g., employment claims, fiduciary exposures).
- Protect the entity (Side C) when corporate indemnification isn’t available.
- Address regulatory and cyber complexity that can drive expensive investigations and reputational losses.
- Comply with contractual or investor requirements (e.g., private equity investors requiring Outside Directors coverage).
For a comprehensive overview of core D&O coverage and how these supplements interact with Side A, B and C, see our internal guides: Comprehensive Guide to Coverage Types in Directors and Officers (D&O) Liability Insurance and Side A vs Side B vs Side C: Which Coverage Matters Most in Directors and Officers (D&O) Liability Insurance?.
Common D&O Extensions and Supplemental Coverages
1. Employment Practices Liability (EPLI) — endorsement or separate policy
What it covers: Claims for wrongful termination, discrimination, harassment, retaliation, and other employment-related allegations against directors, officers and the entity.
Why add it: Many D&O policies carve out employment claims or limit coverage. EPLI fills that gap and responds to employee suits that often name executives. For detailed interactions between EPLI and D&O, see Employment Practices and D&O: When Employment Claims Fall Inside or Outside Directors and Officers (D&O) Liability Insurance.
Typical US SMB cost: $1,000–$5,000/year for $1M limit; endorsements to D&O can increase total premium by roughly 10–40% depending on exposures. (Source: Insureon; Hiscox market data)
2. Fiduciary Liability
What it covers: Claims alleging breaches of duties related to employee benefit plans (ERISA claims), pension mismanagement and fiduciary negligence.
Why add it: D&O usually excludes ERISA/fiduciary claims. A dedicated fiduciary policy protects trustees, plan administrators and the corporate entity.
Typical US SMB cost: $1,000–$6,000/year for $1M limits depending on plan assets and number of participants.
3. Crime and Employee Dishonesty
What it covers: Losses from employee theft, forgery, funds transfer fraud, and third-party social engineering crimes that result in financial loss.
Why add it: D&O is not designed to pay for direct property or financial losses caused by crime. Crime policies respond quickly to operational loss.
Typical US SMB cost: $300–$3,000/year for $100K–$500K limits.
4. Cyber Liability (Sidecar or Separate Policy)
What it covers: Data breach response, forensic investigations, regulatory fines, business interruption, cyber extortion. Some carriers offer cyber endorsements that coordinate with D&O for claims involving privacy or securities allegations arising from breaches.
Why add it: Cyber incidents can trigger shareholder suits and government investigations; combined cyber/D&O planning reduces coverage gaps.
Typical US SMB cost: $1,000–$10,000+ annually depending on limits and industry (healthcare/fintech carry higher premiums).
5. Side A Difference-in-Conditions (DIC) / Side A-only Coverage
What it covers: Protects individual directors and officers for non-indemnifiable loss (when the company cannot or will not indemnify), including bankruptcy scenarios.
Why add it: Critical for startups, distressed companies, and firms where indemnification can’t be guaranteed.
Typical US SMB cost: Additional premium often 15–40% of the primary D&O premium depending on limit and retention.
6. Extended Reporting Period (ERP) / Run-off Coverage
What it covers: Extends reporting window for claims after a policy cancels or the company is sold/merged.
Why add it: Provides protection for exposures discovered after management changes or M&A events.
Typical US SMB cost: Run-off premiums vary — often 100–300% of an annual premium for a multi-year tail depending on limits and industry claim activity.
7. Outside Directorship Liability (ODL) / Side A Broadening for Outside Directorships
What it covers: Protects individuals serving as directors or officers of other organizations at the company’s request.
Why add it: Attracts and protects executives who serve on third-party boards (nonprofits, subsidiaries).
Typical US SMB cost: Often added for $25–100 per director annually or as a small percentage of the D&O premium.
8. Regulatory, Investigative and FCPA/Anti‑Corruption Extensions
What it covers: Defense and investigation costs for regulatory inquiries, including foreign bribery investigations under the FCPA and other cross-border probes.
Why add it: Regulatory investigations can be protracted and expensive; many basic D&O forms limit or exclude fines and penalties, so insureds need tailored wording.
Typical US SMB cost: Often quoted as endorsements with variable pricing; can increase premium by 5–25% based on industry/regulatory risk.
Comparison Table: Key Extensions (U.S. SMB focus)
| Extension | What it covers | Typical additional premium (U.S. SMB) | When to consider |
|---|---|---|---|
| EPLI | Employment claims against execs & entity | $1K–$5K / year or +10–40% as endorsement | Companies with >10 employees, high turnover, or remote workforces |
| Fiduciary Liability | ERISA/benefit plan claims | $1K–$6K / year | Employers offering sponsored retirement/health plans |
| Crime / Employee Dishonesty | Employee theft, fraud, funds transfer loss | $300–$3K / year | High cash-flow businesses, fintech, small banks |
| Cyber Liability | Breach response, BI, extortion | $1K–$10K+ / year | Any business with personal data or online operations |
| Side A / DIC | Non-indemnifiable loss (incl. bankruptcy) | +15–40% of D&O premium | Startups, private companies, distressed firms |
| ERP / Run-off | Claims made after policy termination | 100–300% of annual premium | M&A, dissolution, CEO changes |
| ODL (Outside Dir.) | Claims for outside board service | Small flat fee or % of premium | Execs serving on external boards |
| Regulatory/FCPA | Investigations/penalty response | +5–25% depending on exposures | International operations, regulated industries |
Market context and pricing examples (U.S. cities)
- Small private companies in New York City or San Francisco commonly purchase $1M/$2M D&O limits. Brokers such as Aon, Marsh, and carriers like Chubb and Travelers often underwrite $1M primary D&O for U.S. private companies with annual premiums in a range of $2,000–$10,000 depending on revenue, industry, and claim history (larger tech startups pay toward the upper end). See general market guidance from Aon. (Source: Aon D&O resources)
- Specialty carriers like Hiscox advertise D&O solutions for small businesses with entry-level annual premiums starting around $500–$1,500 for minimal limits (often $500K–$1M) depending on risk profile and state location (e.g., Texas vs. California). (Source: Hiscox D&O product pages)
- For publicly traded companies or complex private equity-backed firms in New York or Chicago, D&O premiums escalate substantially; median premiums for larger public companies can be hundreds of thousands to millions annually, with excess layers and Side A placements via carriers such as Berkshire Hathaway, Chubb, or specialist Lloyd’s syndicates.
Sources and further reading:
- Aon — Directors & Officers Insurance overview: https://www.aon.com/insurance-coverage/directors-officers-insurance.jsp
- Insureon — D&O insurance cost & marketplace: https://www.insureon.com/business-insurance/directors-officers
- Hiscox — Small business D&O insurance: https://www.hiscox.com/small-business-insurance/directors-and-officers-insurance
Buying tips for U.S. companies (NY, CA, IL, TX focus)
- Assess exposures by state: employment laws vary (California’s employee-friendly rules increase EPLI exposure for San Francisco/Silicon Valley firms).
- Bundle strategically: carriers often offer discounts when D&O, EPLI and fiduciary coverages are placed together, but confirm no harmful cross-class exclusions.
- Negotiate Side A and run-off terms if you are a startup seeking investor-required protections or facing potential M&A.
- Use a broker experienced in D&O claims handling. Large brokers (Aon, Marsh, Willis Towers Watson) and regional brokers in New York, Chicago, San Francisco and Austin can access broader markets and excess capacity.
- Review retentions/deductibles: many D&O policies have separate retentions for Side A vs Side B/C and for different extensions.
When an extension is essential
- You have more than 10 employees, planned layoffs, or potential employment disputes → add EPLI.
- You sponsor a 401(k) or health plan → add fiduciary liability.
- You handle sensitive customer data or use third-party payment systems → buy cyber liability and consider coordination with D&O.
- You expect board members to serve externally or you’re private equity-backed → secure Outside Directorship coverage and Side A enhancements.
- You are contemplating sale, merger or dissolution → obtain run-off/ERP coverage.
Conclusion
Supplemental coverages substantially strengthen a D&O program and are increasingly necessary in U.S. markets where litigation, regulatory scrutiny and cyber risk are prevalent. Evaluate each extension in light of company size, industry (tech, healthcare, financial services), and location-specific exposures in New York, San Francisco, Chicago or Austin. Work with a broker to tailor limits, retentions and wording — small differences in endorsements can mean the difference between a defense cost that’s covered and one that’s carved out.
For more on how D&O scope varies across industries and claims types, see How Coverage Scope Varies by Industry: Tailoring Directors and Officers (D&O) Liability Insurance to Your Business and to dive into securities and employment interplay, consult What’s Covered Under Directors and Officers (D&O) Liability Insurance: Securities, Fiduciary and Employment Claims.