TL;DR
D&O protects directors and officers for management decisions and securities claims; E&O (professional liability) protects the entity for professional services rendered. For clinical-stage biotech, D&O is the larger exposure (Phase 2/3 securities-class-action risk); for CRO and CDMO operators, E&O is the larger exposure (sponsor indemnity for professional services). Most life sciences operators need both at different limits.
Two distinct coverages, frequently confused
D&O (Directors and Officers liability) and E&O (Errors and Omissions, also called professional liability) sound similar and are sometimes treated as interchangeable in casual conversation. They are not. They cover fundamentally different exposures, are written by different specialty markets, and need to be sized against different threat profiles.
For life-sciences operators, most need at least one and many need both. The decision is not "D&O or E&O" but rather "what does each cover that the other does not, and which exposures apply to me."
Last updated 2026-05-12
Side-by-side
The confusion source
Both policies are written on claims-made forms with retroactive dates, and both are commonly grouped by brokers under "management liability" or "specialty lines." That structural similarity is the source of the confusion. But what they cover is unrelated. D&O answers "did a director or officer breach their duties in governing the company?" E&O answers "did our service delivery contain an error that caused economic harm to a customer?"
A wrongful termination claim against the CEO triggers D&O (Side B/C) and EPLI. A failed CDMO formulation batch triggers E&O. A securities-class-action against a public biotech triggers D&O. A CRO data integrity error in a regulatory submission triggers E&O. The same operator can need both, and substituting one for the other leaves real coverage gaps.
Frequently asked
D&O (Directors and Officers liability) protects individual directors and officers against personal-capacity claims arising from governance acts - breach of fiduciary duty, regulatory investigations, misrepresentation. E&O (errors and omissions, also called professional liability) protects the company against claims arising from errors in services delivered. They have different triggers, different claimants, and different sizing logic.
Often yes. E&O is increasingly required by sponsor MSAs for CDMOs with development scope (formulation, analytical, scale-up). D&O is not typically MSA-required but is necessary if the CDMO has investor governance, board exposure, or any meaningful regulatory investigation risk. Mid-sized and larger CDMOs typically carry both.
They cover unrelated exposures. E&O protects against service-delivery errors (the dominant CRO exposure). D&O protects directors and officers personally. A privately-held CRO with limited investor governance may operate without D&O; a venture-backed or public CRO almost always needs both.
Biotech D&O underwriting prices three concentrated exposures: securities-class-action risk for public biotechs (settlement frequency is high), regulatory investigation defense (FDA, SEC), and investor disputes around clinical-trial outcomes. Pre-IPO biotechs already face elevated D&O premium relative to operating companies at comparable revenue.
Side A covers individual directors and officers when the company cannot indemnify them - typically because of insolvency, regulatory bar, or contractual constraint. For pre-revenue clinical-stage biotechs with constrained working capital, Side A is the most important D&O component because the company may not be able to step in to defend its directors.
It depends on what caused the batch failure. If the failure was a formulation error or analytical-method error (i.e., a development-services error), E&O typically responds. If the failure was a manufacturing-execution error producing a physical product defect, products liability typically responds. Many real claims have both elements and require coordination between policies.
Free coverage review