Before you buy or renew a D&O policy, check seven things: who is insured, which coverage sides apply, what is excluded, how far back prior acts go, how defence costs are paid, what the notification rules say, and how the limit is structured. Get those right and most nasty surprises disappear. Here is a plain walkthrough you can carry into your next conversation with a broker or insurer.
Renewal has a way of sneaking up on boards. Someone forwards the schedule, someone else says it looks the same as last year, and it gets signed. That habit is risky, because wordings, exclusions and definitions shift quietly from one year to the next. Pull out your current directors and officers insurance documents a few weeks early and read them against how your business runs today, including new subsidiaries, new board members and any funding rounds.
A solid D&O review covers seven points: the insured persons, Side A, B and C protection, exclusions, prior acts dates, defence cost wording, claims notification terms, and the limit structure. Compare each one with what your business actually does today, then ask your broker to explain anything unclear in writing.
What Is a D&O Policy?
Directors and officers liability insurance is a policy that protects board members and senior managers from personal financial loss when they are sued over management decisions. Some people call it executive liability insurance, and the idea is the same: it responds to defence costs, settlements and judgments linked to alleged wrongful acts in the role.
Why Review Before You Buy or Renew
A policy bought three years ago may no longer fit the business you run now. Headcount grows, capital is raised, regulators expect more, and cyber and AI governance now land squarely on the boardroom table. A short review keeps your protection in step with those changes.
Many boards find this easier with a broker who reads wordings every day. A specialist such as MGG Insurance can compare terms side by side and flag gaps you might not spot alone, which helps whether you are buying for the first time or renewing a long standing arrangement.
The D&O Insurance Checklist
Work through these in order. Each point takes a few minutes and can save a lot of grief later.
1. Confirm Who Is Actually Insured
Check the definition of insured persons. It should name current and former directors and officers, and ideally extend to senior managers and anyone acting in a management role. If you want proper company directors insurance in place, make sure any subsidiary added since the last renewal is named too. A gap here is easy to miss and hard to fix after a claim.
2. Check All Three Coverage Sides
These policies are built from three parts. Make sure the ones you need are clearly shown in the schedule.
| Coverage Part | Who It Protects | When It Responds |
| Side A | Individual directors and officers | When the company cannot or will not indemnify them |
| Side B | The company | When it reimburses directors for legal costs it has paid |
| Side C | The company as an entity | For claims made against the organisation itself, often securities related |
Strong D&O insurance coverage means all three parts are clear and not buried in endorsements. Ask too whether there is a dedicated Side A limit, so personal protection is not used up by company claims first.
3. Read the Exclusions Slowly
Exclusions decide whether a policy works when you need it. Look at the conduct exclusion, the insured versus insured clause, and any wording on cyber incidents, professional services or insolvency. Ideally, the conduct exclusion only applies after a final court finding, not at the first allegation. Ask for severability too, so one person’s misconduct is not held against innocent directors.
4. Look at Prior Acts and Retroactive Dates
Most policies are written on a claims made basis. That means they respond to claims made during the policy period, but only for conduct after the retroactive date. If you are switching insurers, push for full prior acts cover so nothing falls into a gap, and check the prior litigation date as well.
5. Understand How Defence Costs and Investigations Are Handled
Legal fees build up long before any verdict. Check whether the insurer advances defence costs as they arise, who picks the lawyers, and whether the definition of a claim includes regulatory investigations and formal enquiries. That wording is what stops a director funding a defence out of personal savings.
6. Review Notification Terms and Run-Off
Late notice can sink a valid claim. Confirm how quickly claims and circumstances must be reported, and who inside the company is responsible for doing it. Ask about run-off cover as well, so directors who leave stay protected for earlier decisions.
7. Check the Limit Structure
Find out whether one limit is shared between the company and all directors, or whether individuals hold their own. Then picture the largest realistic claim your business could face and ask whether the limit still holds up once legal defence is included.
A Simple Pre-Renewal Routine
Step 1. Gather the current policy, schedule and all endorsements.
Step 2. List what has changed in the business since last renewal.
Step 3. Compare the wording against the seven checks above.
Step 4. Ask your broker to explain every exclusion or condition you do not fully understand.
Step 5. Get any agreed changes confirmed in writing before you sign.
Frequently Asked Questions
1. What should I check first when renewing a D&O policy?
Start with who is insured. Make sure new directors, subsidiaries and any change in business activity since last renewal are reflected in the schedule and the policy wording.
2. What is the difference between Side A, Side B and Side C?
Side A protects individuals when the company cannot indemnify them. Side B reimburses the company after it pays on behalf of directors. Side C covers the company itself for certain claims.
3. Does a D&O policy protect directors after they leave?
Often yes, through a run-off or extended reporting period. It covers claims made later about decisions taken while the person was still in the role, so check how long it lasts.
4. When should I start reviewing my policy before renewal?
Begin several weeks before expiry. That leaves time to compare wordings, question gaps, and negotiate changes instead of accepting whatever arrives at the last minute.
5. Is this cover only for listed companies?
No. Private companies, startups and non-profits also face claims from employees, creditors, investors and regulators, so boards of every size benefit from a proper review.
6. What happens if I notify a claim late?
The insurer may decline cover, even for a valid claim. Report claims and circumstances that could become claims promptly, and follow the notification terms in your policy.
Final Thought :
A good policy is not the one with the longest brochure. It is the one whose wording still makes sense on the worst day your board could have. Taking an hour to run this checklist before you sign tends to be the best use of time in the whole renewal process.
MGG Insurance helps boards and business owners go through their wording line by line, close gaps, and match protection to how they really operate. If a renewal is coming up, a second pair of expert eyes is worth having.
