This study examines the association between directors and officers liability insurance(D&O insurance)and investment efficiency. Using a sample of listed non-financial Taiwanese companies from years 2008-2011, we find that D&O insurance is negatively associated with investment efficiency. In particular, firms having D&O insurance are more likely to have overinvestment. We also find that the amount of D&O insurance is positively associated with overinvestment and negatively associated with underinvestment. The results support the opportunism hypothesis that directors and officers are more likely to act opportunistically under the protection of D&O insurance.