What is the main function of directors and officers insurance (DandO)?

The main function of directors and officers insurance (DandO) is to protect directors and officers from personal losses that may arise due to legal actions taken against them in the scope of their role within a corporation. This type of insurance is essential because directors and officers can be held personally liable for a range of decisions made on behalf of the corporation, including breaches of fiduciary duty, misrepresentation, and other wrongful acts.

This protection allows them to act in the best interests of the corporation and its shareholders without the constant fear of personal financial repercussions from lawsuits. Because it specifically targets the liabilities associated with governance and management decisions, it is distinct from other insurance types that handle general liability, workplace injuries, or property theft, focusing instead on the unique risks faced by corporate leaders.