Directors and officers insurance for New York companies, nonprofits and co-op boards
Directors and officers insurance protects the people who lead an organization when they are sued over decisions made in that role. In New York, that includes founders and executives of private companies, trustees of nonprofits, and the neighbors who volunteer on co-op and condo boards.
Gordon Companies is an independent brokerage that has worked out of Midtown Manhattan since 1968. We compare D&O forms across carriers, explain the differences in plain English, and when you call, a real person answers.
What D&O insurance covers
A D&O claim alleges a wrongful act in running the organization: a poor decision, a breach of duty, a misleading statement or a failure to act. Claims can come from shareholders, investors, members, lenders, vendors, competitors or regulators.
Most policies are organized into three parts:
- Side A covers directors and officers personally when the organization cannot or will not indemnify them, for example if it is insolvent
- Side B reimburses the organization when it indemnifies its directors and officers
- Side C, often called entity coverage, protects the organization itself when it is named in a covered claim
Defense costs are usually the largest part of a D&O claim, and most policies pay them as the case moves forward. Fraud, criminal acts, illegal personal profit, and bodily injury or property damage are typically excluded, although many forms keep defending until fraud is actually proven.
Co-op and condo boards in New York City
Serving on a co-op or condo board in New York is a volunteer job with real exposure. Disputes with shareholders and unit owners often involve admissions decisions, renovation approvals, enforcement of house rules, assessments and allegations of discrimination.
A board D&O policy is usually bought by the corporation or association to cover current and former board members and committee volunteers. When we review one for a building, we check:
- Whether the managing agent is included as an insured
- How discrimination claims are handled, since some forms limit them
- Defense for non-monetary claims, such as a suit asking a court to overturn a board decision
- Whether the limit is shared with other coverages in a package
Residents have their own exposures too, which is why we also help owners and shareholders with condo and co-op insurance for their apartments.
Private companies and nonprofits
Private companies
Closely held businesses see D&O claims from minority owners, investors after a capital raise, buyers after an acquisition, creditors and regulators. Private company coverage is often sold as a management liability package that can combine D&O with employment practices liability, fiduciary liability and crime coverage.
Nonprofits
Nonprofit directors are often unpaid, yet they can still be named personally in a suit over governance, use of funds, employment decisions or donor disputes. A nonprofit D&O policy protects the people who agree to serve, which can make it easier to recruit a strong board.
What D&O does not replace
D&O is not a substitute for professional liability insurance, which covers mistakes in the services you provide to clients, or cyber liability coverage, which addresses data breaches and network attacks. We look at how these policies fit together so nothing falls through and you are not paying twice for the same risk.
How we shop D&O and what affects cost
Pricing depends on the type and size of the organization, its finances, industry, ownership structure, claims history, plans for fundraising or acquisitions, and the limit and retention you choose. For buildings, the number of units and any history of disputes also matter.
We compare more than price. D&O forms differ in how they define a claim, how the insured versus insured exclusion is written, who controls the defense, and how broad Side A coverage is. Most D&O is written on a claims-made basis, so we also protect your prior acts date when coverage moves.
Questions we hear about directors and officers insurance
Does a small private company need D&O insurance?
Many do. Owners of small companies can be named personally in suits brought by co-owners, investors, lenders or customers, and defending a claim can be expensive even when it fails.
Can co-op board members be sued personally?
Yes, board members can be named individually. D&O coverage bought by the building is meant to defend them and pay covered losses, so volunteers are not paying out of pocket for decisions made in good faith.
What is the insured versus insured exclusion?
It removes coverage for claims one insured brings against another, such as a director suing the company. Many forms carve back certain claims, such as shareholder derivative or whistleblower suits, and those carve-backs are worth comparing.
Does D&O cover employee lawsuits?
Usually not on its own. Claims such as harassment, discrimination or wrongful termination are typically handled by EPLI, which can often be added alongside D&O.
Related coverage
Get a D&O quote for your company or board
Tell us about your organization or building and we will compare options from several carriers. Start your quote online or call 212-687-2525, Monday to Friday, 9am to 5pm, to speak with Aaron Gordon or another real person on our team.
