Demarcation between PI and D&O Policy is a fine one
A Directors and Officers Liability Policy is a type of Professional Indemnity Policy that provides cover in different and narrower circumstances. The two policies are meant to dovetail together so that liability for a wrongful act is covered under one or the other, but not both at the same time. Drafting the two policies to create the demarcation between them involves relatively subtle changes.
Both policies share much in common:
1. They are both liability policies
2. They are both claims-made and notified policies
3. The both insure liability for wrongful acts (usually a negligent act or omission)
The only real difference between them is the capacity in which the insured is alleged to be liable. In a D&O Policy the insured must be allegedly liable in the insured’s capacity as a director or officer of the company specified in the policy. In a PI Policy there is no such constraint, although there is usually a similarly worded exclusion to the same effect. The greater the similarity between the two, the better, as this is more likely to lead a cleaner dovetailing of the two policies.