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Directors & Officers Liability Insurance Agreement

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Directors & Officers Liability Insurance Agreement

This Directors & Officers Liability Insurance Agreement (the Agreement) is entered into as of by and between Insurer: and Insured: .

Parties and Policy Data

RECITALS

WHEREAS, the Insured is a corporation or other business entity that requires protection for individuals who serve as directors and officers against Claims arising from performance of their managerial duties;

WHEREAS, the Insurer is willing to provide directors' and officers' liability insurance subject to the terms, conditions and limitations set forth herein and in the referenced policy documents;

WHEREAS, the parties desire to set forth their mutual agreement regarding coverage scope, notice obligations, defense and settlement procedures, and other operative terms applicable to Claims made against Insured Persons and the Insured entity;

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Definitions

1.1 "Claim" means any written demand, civil proceeding, criminal proceeding, arbitration, administrative or regulatory proceeding or formal investigative proceeding against an Insured Person seeking monetary damages, civil fines, penalties or relief for a Wrongful Act. Claim does not include routine internal employment disciplinary matters unless a formal proceeding is instituted.

1.2 "Loss" means monetary amounts that the Insured or Insured Persons are legally obligated to pay on account of Claims, including damages, judgments, settlements, pre- and post-judgment interest, and Defense Costs, subject to the terms, conditions and exclusions of this Agreement.

1.3 "Wrongful Act" means any actual or alleged error, misstatement, misleading statement, act, omission, neglect or breach of duty by an Insured Person while acting in an Insured Capacity.

2. Insuring Agreement

2.1 Subject to the terms, conditions, limitations and exclusions of this Agreement and the referenced policy documents, the Insurer agrees to pay Loss on behalf of the Insured and Insured Persons up to the Limits of Liability for Claims first made against such Insured or Insured Persons during the Policy Period and reported in accordance with Section 4.

2.2 Defense Costs are included within, and shall reduce, the Limits of Liability unless otherwise specified in the policy. The Insurer shall have the right and duty to defend any Claim that is potentially covered, subject to the Insurer's reservation of rights where appropriate.

3. Claims-Made, Reporting and Notice

3.1 This Agreement is a claims-made and reported contract. A Claim must be first made against an Insured and reported to the Insurer in writing during the Policy Period or any applicable extended reporting period, and in the manner prescribed in Section 4, to be potentially covered.

3.2 The Insured shall, as a condition precedent to coverage, give written notice to the Insurer of any Claim as soon as practicable but in no event later than thirty (30) days after the Insured first becomes aware of such Claim, except where a different notice period is set forth in the policy declarations.

4. Defense, Cooperation and Settlement

4.1 The Insured shall cooperate fully with the Insurer in the defense and investigation of any Claim, including providing all information reasonably requested and attending hearings and trials as required.

4.2 The Insurer shall have the right to select counsel and to control the defense of any Claim; provided, however, that the Insured shall have the right to retain counsel at its own expense if a conflict of interest exists between the Insurer and an Insured Person. The Insurer shall advance Defense Costs, subject to repayment obligations where applicable under the policy and applicable law.

4.3 No settlement involving the payment of Loss by the Insurer may be made without the Insurer's prior written consent. The Insurer shall not unreasonably withhold consent to a proposed settlement for which the Insurer is responsible under the terms of this Agreement.

5. Exclusions

5.1 Coverage under this Agreement shall not apply to Loss arising out of: (a) fraudulent, dishonest or criminal acts where a final adjudication establishes such conduct; (b) bodily injury or property damage claims; (c) claims based upon or arising from prior notice to any prior insurer or known facts and circumstances excluded under prior policies; or (d) any contractual liability assumed by the Insured unless such liability would have attached in the absence of the contract.

Waiver of insured-vs-insured exclusion applies

6. Premium and Payment

6.1 The Insured shall pay a premium in consideration for the coverage provided. The initial premium payable under this Agreement is and is due on or before .

7. Subrogation and Recovery

7.1 Upon payment of Loss under this Agreement, the Insurer shall be subrogated to the Insured's rights of recovery against any third party to the extent of such payment. The Insured shall do everything necessary to secure and preserve such rights and shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights.

8. Notices

8.1 All notices and claim notifications required by this Agreement shall be in writing and delivered to the addresses set forth below. Notice shall be effective upon receipt.

9. Confidentiality and Privacy

9.1 The parties shall keep confidential the existence of Claims, the contents of claim files and the terms of settlements to the extent permitted by law and except as otherwise required in the ordinary course of business, regulatory filings, or legal process.

10. Amendments, Waiver and Counterparts

10.1 No amendment, modification or waiver of any provision of this Agreement shall be effective unless reduced to writing and signed by duly authorized representatives of both parties. No waiver by either party of any breach shall be construed as a waiver of any subsequent breach.

10.2 This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

11. Governing Law

11.1 This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to its conflict of law principles.

12. Entire Agreement

12.1 This Agreement, together with the policy declarations, endorsements and schedules expressly referenced herein, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, whether written or oral, relating to the subject matter.

13. Severability

13.1 If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

14. Additional Provisions

Insurer

Printed Name:

By:

Date:

Insured

Printed Name:

By:

Date:

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What the Directors & Officers Liability Insurance Agreement Is

The Directors & Officers Liability Insurance Agreement is a contractual policy document that sets out the scope of coverage, limits, exclusions, and conditions under which an insurer will indemnify corporate directors and officers for claims alleging wrongful acts in their management roles. It defines insured persons, covered claims, defense and indemnification obligations, retention/deductible amounts, notice procedures, and claim reporting requirements. The agreement typically coordinates with corporate indemnification provisions and may include side A/B/C distinctions, limits per claim and in aggregate, and terms for settlement authority and cooperation.

Why this Agreement Matters for Directors and Corporations

A Directors & Officers Liability Insurance Agreement clarifies who is covered, reduces personal financial exposure for leaders, secures corporate indemnification practices, and sets claims handling procedures. It helps preserve corporate governance stability by defining defense and settlement responsibilities.

Why this Agreement Matters for Directors and Corporations

Who Typically Completes and Signs This Agreement

Typical users include corporate boards, insurance brokers, in-house counsel, and risk managers responsible for governance and claims oversight.

  • Board members and independent directors seeking personal liability protection when performing fiduciary duties.
  • C-suite executives and officers named in securities, employment, or regulatory claims requiring defense coverage.
  • Small business owners, nonprofit leaders, and board chairs who need clarity on indemnification and insurers' duties.

Use the agreement to document coverage expectations, coordinate corporate indemnity, and reduce disputes over defense responsibilities among parties.

Key Parts of a Professional Directors & Officers Liability Insurance Agreement

Core sections define insured persons, covered claims, exclusions, limits and sublimits, retention amounts, duty to defend, notice obligations, and settlement authorization.

Insureds

Lists directors, officers, and, where applicable, former and prospective individuals covered. May extend to spouses for defense of derivative claims and to corporate entities in side C coverage.

Covered Claims

Specifies types of wrongful acts included such as breach of fiduciary duty, misrepresentation, employment practices, regulatory investigations, and securities claims, subject to policy definitions and exclusions.

Limits

States per-claim limits, aggregate limits, and potential sublimits for securities or employment claims; may include separate limits for Side A (individual) coverage and specify priority of payments.

Retention

Defines deductible or retention amounts the insured must pay per claim or in aggregate, and clarifies whether defense costs erode the limit or are outside the limit.

Exclusions

Lists standard exclusions such as intentional fraud, criminal acts, knowingly improper personal profit, bodily injury and property damage, and ERISA or other statutory exclusions when applicable.

Claims Handling

Defines notice timing, insurer consent for settlements, defense counsel selection, cooperation duties, subrogation rights, and procedures for claims made versus occurrence-based triggers, plus reporting requirements.

Step-by-Step: Preparing, Completing, and Executing the Agreement

[INTRO] Prepare the agreement by gathering corporate documents, insurer terms, and signer authority before completing fields and obtaining signatures.

  • 01
    Gather Documents: Collect bylaws, board minutes, indemnification resolutions, and prior policies.
  • 02
    Confirm Coverage: Review limits, exclusions, retention, and Side A/B/C allocations.
  • 03
    Fill Fields: Enter legal names, effective dates, addresses, and policy numbers.
  • 04
    Sign & File: Obtain authorized signatures, notarize if required, and distribute executed copies.

Recommended Digital Workflow Settings for eSigning and Archival

Configure an online workflow to route the Directors & Officers Liability Insurance Agreement through review, approval, signature, and archival steps.

Workflow field or setting name How to set the workflow value.
Signer order and routing rules Sequential or parallel routing with conditional approvals.
Authentication method and strength level Email link, SMS OTP, or KBA depending on risk.
Notification settings and reminder schedule Automatic reminders at configurable intervals to reduce unsigned documents.
Archival location, retention, and access Save signed copies to secure storage with retention tags.

How Electronic Submission and Recordkeeping Works

Follow this workflow to transmit the agreement to insurer, receive acceptance, and maintain an audit trail for claims and compliance.

  • Prepare Document: Convert to PDF, ensure fillable fields, and attach exhibits.
  • Upload: Upload to eSignature platform supporting ESIGN and UETA.
  • Authenticate: Choose signer authentication: email, SMS code, or knowledge-based.
  • Archive: Store signed PDF with audit trail and retention metadata.

Platform and Format Requirements for eSubmission

The agreement benefits from platforms that support ESIGN, UETA compliance, audit trails, and secure storage controls for claims and regulator review.

  • Formats: PDF and Word DOCX formats supported
  • Integrations: Salesforce, NetSuite, Google Workspace supported
  • Auth options: Email link, SMS OTP, KBA

Pricing and Feature Snapshot for eSignature Vendors

Compare signNow against other popular eSignature vendors for pricing, trial availability, bulk send, audit trails, and HIPAA compliance.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial, no card Varies by plan Varies by plan Varies by plan Varies by plan
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Essential Policy and Security Data to Record

Policy Number: Unique insurer policy identifier
Insurer Name: Primary carrier legal name
Named Insured: Entity or individual named insured
Coverage Period: Effective start and end dates
Limit Amount: Per claim and aggregate limits
Retention/Deductible: Amount insured must pay

Common Risks and Consequences of Errors

Late Notice: May void defense or indemnity.
Coverage Denial: Material misrepresentation risks denial.
Personal Exposure: Directors may face uninsured liability.
Regulatory Fines: SEC or state penalties possible.
Higher Premiums: Underwriting surcharge or nonrenewal risk.
Litigation Costs: Defense costs borne personally.

Practical Controls and Habits to Prevent Disputes

Follow these practical practices to reduce coverage disputes, speed claims handling, and maintain enforceable Directors & Officers Liability Insurance Agreements.

Align corporate indemnification with policy terms
Ensure corporate bylaws and indemnification resolutions match policy definitions and named insured language; discrepancies can create coverage gaps or contested claims, so coordinate counsel, board resolutions, and insurer endorsements before execution to avoid later disputes.
Document claim notice procedures and timelines
Specify notice procedures, point of contact, acceptable delivery methods, and timing for reporting potential claims. Late notice can prejudice coverage; include procedures for electronic notice, required attachments, and escalation if multiple insurers or reinsurers are involved.
Preserve audit trails and signed records
Use platforms that record timestamps, IP addresses, signer authentication, and version history. Store tamper-evident PDFs and maintain access controls. Adequate audit trails support defense positions, meet regulator expectations, and satisfy legal challenges to signature authenticity.
Regularly review and update coverage terms
Review limits, sublimits, and exclusions annually or after material corporate changes such as mergers, board composition shifts, or regulatory investigations. Update endorsements, renewals, and corporate indemnity documents to align with current exposures and legal obligations.

How Organizations Apply This Agreement in Practice

Representative examples show how organizations use the Directors & Officers Liability Insurance Agreement to streamline coverage and claims management workflows.

Optica Ventures

Optica Ventures integrated a standardized Directors & Officers Liability Insurance Agreement into board onboarding and renewal workflows to ensure consistent coverage terms.

  • Signing turnaround time dropped from days to hours.
  • By centralizing documentation and using controlled templates, the company reduced disputes over coverage interpretation, ensured timely notice for claims, and preserved consistent audit trails for compliance.

BIS

BIS used a standardized agreement and digital signatures to manage indemnity obligations across multiple subsidiaries and to centralize defense cost allocation procedures.

  • Legal workflows centralized and documented.
  • The approach improved consistency in notifying insurers, reduced delays in appointing counsel, and provided an auditable record that simplified dispute resolution and regulator responses during claims and examinations.

Frequently Asked Questions About Completion and eSigning

Answers to frequent questions about completing, signing, and enforcing a Directors & Officers Liability Insurance Agreement, including eSignature and retention concerns.


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