deepthi sA missed clause in a D&O policy can turn a perfectly legal safety net into a financial trap.
In a country like India, where the regulatory landscape is more scrutinised than ever, a missed exclusion or an outdated policy can leave directors exposed to lawsuits, penalties, and shareholder claims.
Many companies realise this only after it’s too late. When a claim is denied, it puts personal assets at risk.
This guide addresses the top D&O insurance mistakes to avoid, helping Indian businesses protect their executives, remain compliant, and prepare for unexpected costs.
Mitigata – Your Trusted D&O Insurance Partner
Selecting the right partner for Directors and Officers (D&O) liability coverage can make all the difference. Mitigata has earned the trust of hundreds of Indian businesses by doing what truly matters – helping companies secure protection that actually fits their risk profile.
Partnering with top insurers such as HDFC ERGO, ICICI Lombard, and Kotak Zurich, Mitigata combines strong coverage options with transparent pricing to deliver unmatched value.
Get ₹40L D&O Cover At Just ₹10,000/Year.
We compare quotes, handle paperwork, and provide fast claim settlements when you need it the most.
Why 800+ Businesses Choose Mitigata
- Smart Pricing: Get competitive premiums without compromising on critical coverage.
- Risk-Aligned Solutions: Policies tailored to your company’s industry, structure, and exposure.
- Seamless Process: From proposal to policy issuance, we make insurance simple and hassle-free.
- Always-On Support: Our experts are available 24/7 to guide you through claims, renewals, and compliance needs.
- Expert-Driven Service: You get access to experienced professionals who understand business risks and how to protect against them.
Top 10 D&O Mistakes to Avoid
Leaders often face risk without realising how small decisions can trigger legal, financial, or personal exposure. Knowing the most common D&O mistakes helps protect both the organisation and the individuals who guide it.
Treating All D&O Policies the Same
Many organisations operate under the misconception that every D&O policy is no different from the next. This could not be further from the truth. Each carrier has its own definitions for its terms, such as “wrongful act,” “defence costs,” and “insured person.”
A D&O policy appropriate for a multinational company may not be suitable for an emerging startup. It is critical to compare coverage terms, what is included in defence costs, and the structure of any limits before finalising a policy. A generic policy is likely to leave significant coverage gaps when the coverage is needed most.
Skipping Over the Exclusions Section In The Policy
Yet another common D&O insurance mistake involves simply skipping the exclusions section of the policy. Many directors will only look at total coverage and not consider what is excluded.
Common exclusions include:
- Acts of fraud or dishonesty
- Gaining illegal personal profit
- Any prior known acts before policy inception
- Fines and penalties imposed by various laws
Any risks excluded in a policy can lead to a claim being denied. Each exclusion should be thoroughly reviewed, and if an exclusion is unclear, that should be addressed before signing the policy contract.
Want to know how premiums are calculated? Check out this guide on professional indemnity insurance premiums
Failing to Update Policy as the Organisation Evolves
Most organisations change in some way, often involving raising additional funds, merging with another company, or simply adding new directors. However, it is common for organisations to forget to update the directors’ & officers’ insurance.
Regulatory Exposure Ignored
It Is All About Compliance. Regulatory noncompliance has emerged as one of the leading triggers for D&O claims in India. The Companies Act, SEBI, and MCA regulations impose personal liability on directors as a result of failures in governance, inaccurate and incomplete disclosures, and violations of compliance.
In recent years, regulators have substantially heightened scrutiny of insider trading, data privacy, and financial misreporting, among others. Directors could personally face lawsuits or penalties even if there was no awareness of a violation.
Recommendations for Actionable Solutions
Have a complete annual D&O risk audit that identifies gaps in coverage for regulatory investigations.
Make sure your policy covers costs incurred from inquiries initiated by SEBI, MCA, or other authorities.
Work with a risk advisor with a strong understanding of Indian corporate law to keep your coverage up to date with regulatory changes.
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Leaving Out Entity Coverage
One common mistake companies make with D&O insurance coverage is failing to ensure coverage for their directors and officers, but not for the corporate entity.
In countless lawsuits, both the individual and the organisation are named as individual defendants. If coverage is not extended to the entity, the Company will have to incur its own legal costs, placing that organisation in a financially precarious position. Being separated from the individual(s) coverage can also create reputational issues during the litigation phase of the lawsuits.
A full policy should cover both the directors and the entity when there is a shared liability.
Not Disclosing or Omitting Important Facts
Not disclosing is one of the biggest reasons for claim denials. Some companies forget to indicate whether there were any pending investigations, pending litigation or board complaints during the application process.
Without disclosing those facts, carriers might later deny claims with the explanation of misrepresentation. Proving all the facts from the outset allows your carrier to provide full transparency and keep the policy in force during a claim.
Want to explore your options? Check out our expert comparison of the top D&O Companies in India
Selecting the Lowest Price
Making a decision solely based on price can often lead to complications down the road. A low-price policy just may have policy limitations like much lower defence cost limits, much higher deductibles or definitions of coverage that are much narrower than a more comprehensive policy.
It is important to note that a good D&O policy should achieve a balance between price and protection. Sometimes, even paying a little more for broader coverage could save your company millions against litigation.
Duplicative Coverage
A company that has Professional Indemnity (PI) or Cyber Insurance may not correctly coordinate them against their D&O policy. The duplication in coverage can create uncertainty about which policy will apply first when a claim is made.
Having to sort through duplicative coverage adds unnecessary difficulty to the claim process. We advise you to examine the policies as a whole and establish clear lines of coverage for each designation. This leadership approach will facilitate an effective claims process.
A Claim Shouldn’t Cost You Your Long-Built Credibility
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Overlooking Tail Coverage
Upon a director exiting a company or after a merger takes place, claims may arise from actions or decisions made while in that capacity. Tail coverage, generally referred to as run-off coverage, would extend a company’s coverage for claims arising from past acts or failure to act when a director has exited the board of directors.
Without a tail coverage extension, former leadership may be personally liable for some extended period after separation.
Navigating D&O Insurance Alone
Numerous businesses purchase D&O insurance directly through general insurance brokers, without seeking specialised advice. This lack of advice can result in improperly insured coverage, insufficient or unclear language, and omitted crucial add-ons to the policy that would have a significant impact on a claim.
A specialist advisor would understand differences in insurer wordings, negotiate policy terms, and offer guidance in the event of a claim. The manager will help enable the company’s ability to respond to risk challenges more favourably, while simplifying the management of its insurance policy.
Conclusion:
D&O insurance is an important layer of protection for any company that values its leadership team. Avoiding these ten mistakes, ranging from ignored exclusions to lack of compliance coverage, can save time, cost, and credibility during difficult situations.
Take the smart step today.
Contact Mitigata for a free demo and secure comprehensive coverage that fits your organisation’s structure, risk exposure, and growth plans.
akshit k