First Cover is a global professional services firm headquartered in New York, serving clients in more than 120 regions worldwide. We support public and emerging growth companies operating in complex market environments through integrated capital markets advisory, public perception strategy, and regulatory compliance services.

5 Key Steps to Evaluate Your Board's Insurance Coverage

Is your Directors & Officers (D&O) insurance actually protecting you? Here are five critical takeaways for board members to confirm their coverage is doing its job:

Align Coverage Limits with Actual Risk: Avoid relying on arbitrary benchmarks (like a standard $5M or $10M limit). Your coverage must specifically reflect your company's current valuation, specific operational risks, and upcoming transactions. What protects one company could leave yours dangerously exposed.

Isolate Your Personal Protection: Many policies pool corporate legal defense and directors' personal protection into a shared limit. If a massive corporate lawsuit drains that limit, directors are left unprotected. Always verify that your personal protection (dedicated "Side A" coverage) is isolated and cannot be exhausted by the company's bills.

Clarify Upfront Retentions: Understand exactly what your deductibles are before the insurance kicks in. Crucially, confirm with your broker that your personal protection (Side A) carries a $0 deductible so you aren't paying from your own funds for defense costs.

Secure Coverage Prior to Transactions: If your company is navigating an M&A deal or an IPO, do not wait until after closing to update your policy. You must lock in tail coverage for past actions and structure a new policy for future operations before the deal is finalized.

Conduct an Annual Specialist Review: Executive liabilities and regulatory environments evolve rapidly. Schedule a yearly review with a specialized broker, not a generalist, to confirm your policy stays ahead of changing compliance rules and market conditions.

Ready to assess your current coverage? Schedule a complimentary half hour consultation with our specialists: email [email protected].