Business insurance comes in many forms and policies. Directors and officers insurance (D&O) insurance is a common policy geared to protect a business’ board of directors and their officers. Professional liability insurance protects professionals in the face of claims. So what is the difference?

Who it Protects 

While both coverages deal with lawsuits against certain individuals, the individuals covered are different. D&O insurance specifically covers members on a board of directors and officers. Professional liability insurance, on the other hand, covers professionals (of nearly any position within a company) that offer specialized services. A director or officer does not have to be a specialist or a professional in order to be covered under D&O insurance. These same individuals would not, however, qualify for professional liability insurance.

Professional liability insurance is geared specifically for claims filed by clients who have received a professional service from the policyholder.

Directors and officers, however, can be sued by a variety of third parties. These claims can come from investors, shareholders, creditors, employees, third parties, clients and others. While D&O insurance can cover clients who lost money due to the director’s or officer’s actions, the individual on the board is not providing a professional or specialized service, thus they would not be covered under professional liability insurance.

Many businesses choose to carry both of these insurance policies. Medical companies, for example, often have both a board of directors and specialized professionals that are equally at risk for a lawsuit. It’s important to consider the risks your employees face and invest in the correct type of insurance to protect them and the business.