Most of the prior researches on the directors' and officers' (hereafter D&O ) liability insurance have concentrated on its demands, determinants, or developments in the future. The purpose of this study is to investigate the association between D&O liability insurance coverage and the information disclosure quality and the incidence of corporate fraud for firms publicly listed in Taiwan for the period from 2007 to 2012. The empirical results show that the companies with D&O liability insurance coverage have higher information disclosure quality and have lower probability of fraud occurrence than those of companies without D&O insurance. Besides, there is a positive relation between D&O insurance coverage limits and information disclosure quality and a negative relation between D&O insurance coverage limits and the incidence of corporate fraud. Overall, the empirical results generally support the incentive motivation effects of the D&O insurance coverage for the directors and officers. The D&O insurance coverage not only leads the directors and officers to act prudently to increase the corporate information transparency but also depresses the incidence of corporate fraud.