Practical Guide to Reading Your Directors and Officers (D&O) Liability Insurance Declarations and Schedules

Directors & Officers (D&O) insurance protects individual directors, officers and, in many policies, the company itself against claims alleging wrongful acts. The Declarations page and attached Schedules are the single most important documents to read first — they tell you what is actually being bought. This guide, focused on the USA market (with examples from New York, San Francisco and Chicago), walks you line-by-line through what matters, how to interpret dollar amounts, and what to watch for when negotiating coverage.

Why the Declarations and Schedules matter

The Declarations (Dec) page summarizes the contract: insureds, limits, retentions (deductibles), premium, policy period and endorsements. Schedules provide the granular details — who’s covered, prior/pending litigation lists, entity coverage items, and tailored endorsements that materially change coverage.

Reading only the policy wording without the Decs/Schedules is like reading the engine manual but not looking under the hood. The Decs/Schedules answer the immediate questions an executive or General Counsel needs:

• Who exactly is insured?
• What limit and retention apply to each coverage part (Side A/B/C)?
• Are any persons or claims excluded by schedule?
• Which endorsements amend core coverage?

Key items on the Declarations page (line-by-line)

Below are the standard Declarations items and how to interpret them.

• Named Insured(s) — The corporate entity(ies) specifically insured. If your company operates subsidiaries in California, New York or Illinois, confirm those subsidiaries are listed or included by “including subsidiaries” language.
• Policy Period / Effective & Expiration Dates — Be mindful of retroactive dates; claims-made D&O policies only cover claims made and reported during the policy period (subject to any extended reporting periods).
• Limits of Liability — Often shown as total limit and sometimes split by Side (A/B/C). Example: “Each claim / Aggregate: $5,000,000 / $5,000,000.”
• Retention / Deductible — The amount your company pays before insurer advances or indemnifies. For Side A-only buy-downs the retention may be $0 for individual directors.
• Premium — Total annual premium and premium allocation by Insuring Agreement. Premiums vary widely by company size, industry, public vs. private status and geography.
• Forms & Endorsements — List of all endorsements attached. Critical to read each referenced endorsement—it modifies the policy. Typical endorsements include entity coverage amendments, consent-to-settle, severability, advancement, and prior-acts.
• Insurer(s) and Paper Structure — Primary carrier and excess carriers; note pro rata or follow-form wording for excess layers.

Typical Schedules you’ll find and how to read them

• Schedule of Insured Persons / Named Individuals — Confirms which current/ former directors or officers are explicitly included or excluded.
• Schedule of Entities / Subsidiaries — Lists which corporate entities are covered. If a subsidiary is omitted, its directors may be uncovered.
• Schedule of Prior & Pending Litigation — Disclosed matters that can be excluded or change coverage. Prior notice can produce carve-outs or endorsements.
• Schedule of Endorsements — Cross-references each endorsement by title and form number — necessary for quick retrieval.
• Schedule of Limits and Allocations — If the insurer allocates limits differently across Side A/B/C, this schedule explains how.

Practical examples and US market context

Below are illustrative premium ranges and typical retention structures for companies in the USA. These are market examples for context — actual quotes will vary by carrier, industry and loss history.

Sources: Insureon D&O cost guide, Hiscox D&O product pages and market commentary on rate trends. Note: market pricing has been volatile since 2020–22 with hardening cycles affecting public D&O pricing more dramatically — consult brokers like Marsh or Willis Towers Watson for large placements.

Recommended carriers often used in US placements: AIG, Chubb, Travelers, Hiscox and Beazley. For small-to-mid private companies, Hiscox and Chubb can offer competitive packages; established brokers report small-business D&O policies starting around $1K–$5K/year for $1M limits depending on jurisdiction (NY, CA tend to price higher).

How to read limits and Side A/B/C on the Decs

• Side A covers individual directors/officers when the company cannot indemnify them (e.g., bankruptcy).
• Side B reimburses the company when it indemnifies its executives.
• Side C (Entity Coverage) protects the company itself for securities claims.

If the Declarations only show a single aggregate limit — confirm whether that applies on a shared basis across Side A/B/C or is allocated. A Common pitfall: an advertised $5M limit may be shared across all sides (not $5M per side), significantly reducing available coverage for any one claim.

See also: Side A, B & C Explained: The Three Pillars of a Directors and Officers (D&O) Liability Insurance Policy.

Red flags to spot on the Declarations & Schedules

• Retroactive Date Present but Unclear — If a retroactive date exists, verify prior acts coverage and whether a prior acts date applies to new executives.
• Broad Exclusions Listed in Schedules — Financial condition, fraud, prior litigation exclusions can render coverage illusory.
• No Explicit Named Insured for Subsidiaries — If your subsidiary in California isn’t listed, its directors might not be covered.
• Consent-to-Settle Clause without Board Protections — Could force settlement terms detrimental to directors (see Consent to Settle Clauses: What Boards Must Know).
• Low Limits with High Retention — May leave directors personally exposed for defense costs.

Also read: Policy Wording Red Flags: Key Clauses to Negotiate in Your Directors and Officers (D&O) Liability Insurance.

Practical checklist for CFOs and General Counsel (USA-focused)

• Confirm the policy period, retroactive date, and extended reporting option.
• Verify named insureds and subsidiary schedules for NY/CA/IL operations.
• Confirm limit structure (per-claim vs aggregate; per-side allocations).
• Check retention vs advancement — is defense advanced pending final determination?
• Retrieve and read each endorsement listed on the Decs.
• Ask broker for carrier appetite and alternative quotes (AIG, Chubb, Travelers, Hiscox).
• If public company, request market commentary from large brokers (Marsh, Willis) about current D&O volatility and pricing.

Final tips for negotiation and renewal

• Push for Side A enhancement and low retentions for individuals if bankruptcy is a realistic risk.
• Negotiate narrower exclusions and explicit severability & advancement language.
• Use claims history and strong governance improvements (compliance programs, independent committees) to lower premium in NYC/SF markets.
• Consider a DIC (difference-in-conditions) or excess Side A tower from a carrier with strong financial strength if primary carrier has limited Side A language.

For deeper reading on how insuring agreements work and practical allocation considerations, see: Breaking Down a Directors and Officers (D&O) Liability Insurance Policy: Insuring Agreements Explained and Allocation Clauses in Directors and Officers (D&O) Liability Insurance: How Courts and Policies Split Costs.

External references and market sources

• Insureon — How much does D&O insurance cost? https://www.insureon.com/small-business-insurance/d-o
• Hiscox — Directors and Officers Insurance (product overview and small business pricing examples) https://www.hiscox.com/business-insurance/insurance-products/directors-and-officers-insurance
• Market commentary on D&O rate trends — consult major brokers (Marsh, Willis Towers Watson) for enterprise placements and current rate movement analyses.

Use this guide as a practical reading checklist when you open the Decs and Schedules from insurers in New York, San Francisco or Chicago — the right close reading saves directors and the company from exposure and surprises at claim time.