What is the primary purpose of a D&O policy as opposed to a General Liability policy?

• A. To cover only property damage.
• B. To cover only auto liability.
• C. To cover wrongful acts by directors or officers; governance, securities provisions, and corporate policy features shape defense.
• D. To cover medical payments.

Answer: (C)

Directors and officers insurance is built to protect the people who run a company from claims alleging wrongful acts they committed in their corporate roles. The focus is on governance decisions, fiduciary duties, misstatements, and other acts tied to leading the organization, including securities-related claims. This coverage typically pays defense costs and settlements when a director or officer is sued for mismanagement or breaches of duty, which is why the policy language centers on how governance and corporate policy influence defense.

General liability, by contrast, covers separate risks such as bodily injury, property damage, and related premises or operations liabilities arising from the company’s day-to-day activities. Those kinds of losses are outside the scope of D&O and fall under GL. So the primary purpose of a D&O policy is to cover wrongful acts by directors or officers, with governance and securities issues shaping how those defenses are handled.