Directors and Officers (D&O) insurance protects the personal assets of business leaders — board members, officers, and executives — from lawsuits alleging wrongful management decisions. While often associated with public companies, D&O is increasingly relevant for private Florida small businesses, nonprofits, and LLCs that have outside investors, multiple members, or boards of directors. Here's what Florida business owners need to know.
D&O covers personal liability of directors and officers for: breach of fiduciary duty claims, employment-related decisions (wrongful termination, discrimination), investor/shareholder disputes, regulatory investigations, and failure to maintain adequate corporate governance. It is NOT covered by GL (which covers bodily injury/property damage) or E&O (which covers professional service errors). D&O covers the wrongful acts of individuals in their management capacity.
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Standard D&O policies have three insuring agreements: Side A (covers individuals when the company cannot or will not indemnify them — most critical for personal asset protection); Side B (reimburses the company when it has indemnified its directors/officers); Side C (covers the company entity itself for securities claims — primarily relevant for public companies). Private Florida small businesses often purchase Side A + B coverage; Side C is added when seeking outside investment or preparing for public markets.
Florida small businesses that benefit most from D&O: (1) Businesses with outside investors (VC, angel, PE) — investors frequently require D&O as a condition of investment; (2) Nonprofits with volunteer boards — directors serve without compensation and need personal protection; (3) Businesses with multiple LLC members or partners — management decision disputes between members are D&O exposures; (4) Companies in regulated industries (financial services, healthcare, construction) — regulatory investigations are a covered D&O trigger.
Employment Practices Liability (EPLI) covers employee claims — wrongful termination, discrimination, harassment. D&O covers investor/shareholder/regulatory/governance claims against management. They often overlap (an officer's discriminatory termination decision can generate both an EPLI and D&O claim), and many insurers sell them together or as endorsements to one another. For Florida small businesses with employees and outside stakeholders, both EPLI and D&O are advisable.
Private company D&O for a Florida small business (under $5M revenue, no outside investors) runs $1,500–$5,000/year. Businesses with VC or private equity investors, or those in regulated industries, pay $5,000–$25,000/year. Nonprofit D&O is typically less expensive — $1,000–$4,000/year for small organizations. D&O is a claims-made policy; tail coverage must be purchased when dissolving, selling, or merging the business.
We help Florida businesses compare D&O coverage — protecting your board, officers, and investors from costly personal claims.
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