Directors & officers liability insurance, or "D&O," provides coverage for the directors and officers of a business if they are sued in conjunction with the performance of their duties as they relate to the company. You’ll need directors & officers insurance as soon as you assemble a board of directors.

Directors & officers liability insurance usually includes employment practices liability and sometimes fiduciary liability. Fiduciary involves harassment and discrimination suits, and is where the majority of your exposure will be.

Directors & officers insurance is necessary because:

• Claims from stockholders, employees, and clients will be made against the company and against the directors of the company. Since a director can be held personally responsible for acts of the company, most directors and officers will demand to be protected rather than put their personal assets at stake.
• Investors and members of your board of directors will not be willing to risk their personal assets to serve as a corporate director or officer, no matter how heartfelt their belief in your company.
• Employment practices lawsuits constitute the single largest area of claim activity under directors & officers policies. Over 50% of D&O claims are employment practices-related.