How to Save on Directors and Officers Insurance
Directors and officers insurance is priced on how a company is run as much as on what it does. This guide covers the governance and financial habits a D&O underwriter looks for, and the policy choices that keep the premium in proportion to the company’s real exposure.
What sets a D&O premium
Insureon’s published cost data lists the main rating factors: industry, the limit and deductible, the number of directors, headcount, location, annual revenue and claims history. Larger boards mean more potential defendants, and industries where board decisions weigh heavily on results carry higher rates. The directors and officers insurance page explains what the coverage does and how its parts fit together.
Beyond those numbers, underwriters read the company itself. In a piece for the National Association of Corporate Directors, Marsh’s D&O product leader wrote that insurers scrutinize private and nonprofit companies’ financials and governance, and that because these companies publish less information, the submission carries more weight. That is good news for a small company: much of what an underwriter sees is in your hands. How to Save on Business Insurance covers the habits that help across every line.
Governance an underwriter can see
Insureon’s suggestions for lowering D&O cost begin with governance: standardize how decisions are made, add a formal review process for major decisions, and make sure every board member knows the indemnification provisions in the bylaws. Those steps are inexpensive, and they leave a record an underwriter can read.
- Hold board meetings on a set calendar and keep minutes that show what was discussed, not only what was voted.
- Adopt a written conflict-of-interest policy and have directors disclose conflicts each year.
- Write down who can sign contracts, borrow money and hire senior staff, and up to what amount.
- Keep bylaws, shareholder or operating agreements and board resolutions current and in one place.
An attorney who advises companies or nonprofits should review the bylaws and indemnification language, since those documents decide when the company can step in for its directors. The insurance follows from them rather than replacing them.
Financial controls and clear statements
Financial strain is the condition D&O underwriters watch most closely. In a December 2025 Insurance Business article, Allianz Commercial’s private company leader described more underwriting discipline around companies’ financials and how they service their debt, with underwriters asking when debt comes due and whether the company has talked with its lenders.
Have those answers ready before the questions arrive. Bring year-end financial statements prepared or reviewed by a CPA, a current budget, a debt schedule with maturities and covenants, and for a startup, the cash runway and the investors behind the latest round. The same article notes that the information, prudence and diligence a company has shown also help in defending a claim, so the effort pays off twice.
Employment practices and the management liability package
Many claims against directors and officers come from employees, and Insureon names strong HR practices and documentation among the ways to show carriers that risk is managed. A current handbook, consistent written reviews and a standard process for complaints and terminations all count. How to Save on Employment Practices Liability Insurance covers those steps in depth.
Insureon also notes that bundling D&O with employment practices liability and fiduciary liability coverage can earn a discount. Packaged forms often share one limit across the parts, so compare a package’s shared limit with separate limits before choosing. Make sure each policy does its own job: a D&O form usually leaves out claims about professional services, which belong on an E&O policy, as How to Save on Errors and Omissions Insurance explains. Buying each for its purpose avoids paying twice for the same exposure.
Limit, retention and Side A choices
The retention, the D&O term for a deductible, is the plainest price lever. Insureon reports an average D&O deductible of about $2,500 among its customers and warns to choose one you could comfortably pay, since coverage does not begin until the company covers that amount. A higher retention lowers the premium, but only choose one the company could fund during the same bad year that produced the claim.
On limits, start from what investors, lenders or the board require, then weigh what a defense would cost in your industry. Marsh’s guidance for growing companies is to consider higher limits and an appropriate amount of dedicated Side A coverage, which protects individual directors when the company cannot indemnify them. A Side A layer is usually priced separately from the main policy, so ask for quotes with and without it rather than cutting the core limit.
Presenting the company at renewal
Marsh advises private and nonprofit companies to treat the underwriting submission as a chance to show strengths: answer every question fully, address concerns before they are raised and provide supplemental information beyond the renewal application. A two-page summary of the year, covering board changes, financial results, new controls and any disputes and how they were handled, does that job well.
Insureon notes that premiums can vary significantly between insurers and that many discount a premium paid annually, so compare quotes on the same limit and retention. Nonprofit boards follow the same steps with their own documents, and the annual insurance review checklist keeps the renewal paperwork on one list.
A few useful answers
Common questions
Does adding directors change the cost of D&O insurance?
Board size is a rating factor, and more directors can mean more potential defendants. Directors with finance or industry experience can also strengthen the governance story underwriters read, so describe each board member’s background in the submission.
Can a startup lower its D&O premium with a higher retention?
A higher retention reduces the premium because the company pays more of each claim first. Choose a figure the company could fund from cash during a difficult year, not one that assumes the next round closes.
Which financial documents help a D&O underwriter price a private company?
Year-end statements prepared or reviewed by a CPA, a current budget, a debt schedule showing maturities and covenants, and for startups the cash runway and recent funding. Clear answers on debt matter most when results are under pressure.
Is it less expensive to buy D&O, EPLI and fiduciary coverage together?
Published insurer guidance says bundling the three can earn a discount. Check whether the package shares one limit across all three parts, since a shared limit can run out faster than separate ones.
How does financial stress at a company affect its D&O renewal?
Underwriters apply closer scrutiny to companies under strain, asking about debt maturities, covenants and lender talks. Preparing those answers in advance and showing active board oversight gives the underwriter a fuller picture.