MMA Blog

An Explainer on D&O Coverage and Why All Executive Boards Should Have It

Serving on a board can be a rewarding experience for any professional. You help make decisions that guide a group and you gain experience helping your community. Boards come in many shapes and sizes. You might serve on a board of directors for a large company or a local non-profit organization planning after-school programs. Or you might serve on your condo association's board helping to make sure the boiler gets replaced in a timely fashion. Either way, you are tasked with making reasoned decisions and seeing them through to completion.

But serving on a board can also leave you vulnerable to lawsuits when the group makes an unpopular or harmful decision. When creating or considering joining a board of directors, you should always make sure that the group's liability is covered with Directors and Officers Insurance (D&O), which can be provided by local experts at Marsh McLennan Agency (MMA).

How does D&O differ from general liability?

All businesses get general liability policies to cover things like slips and falls. D&O coverage, however, offers additional protection, specifically for directors and officers. Think of this as “decision insurance” in the sense that these leaders can make willful decisions that can impact stakeholders like employees, investors or members of the public. A board might make a decision that can impact a stakeholder financially or make them upset enough to sue the board of directors.

Protect your board and protect yourself, with D&O coverage

Serving on a board could also expose you to a less obvious risk. You can be sued individually, meaning your personal assets could be at risk if you do not have D&O coverage.

D&O claims are on the rise, with average settlement costs equaling $56 million in the first half of 2025.

In states like Montana, with a so-called "Good Samaritan Law," some people might think they're safe from personal liability suits. But the law doesn't cover an entity or individuals on a board of directors who make specific decisions (not accidental mistakes).

The difference between the law and D&O coverage is that the law does not protect the entity and does not provide protection for willful misconduct. That's the key. In addition, while you might be in the right, thanks to some parts of the Good Samaritan Law, it doesn't provide you with legal assistance, which D&O coverage would.

Remember, defending yourself can get spendy. While the law might help you win your case, it won’t buy you an attorney.

Ready to get started with D&O coverage? Start a discussion with one of our agents today.

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