Directors and officers insurance
Cover options for company directors and senior managers, including claims made against them personally and investigation costs.
What is directors and officers insurance?
Directors and officers insurance (D&O) can cover directors and senior managers personally against claims alleging wrongful acts in running a company, such as breach of duty, misleading statements or failing to comply with the law. It can pay defence costs and compensation they're legally liable for, up to the limit on the policy. In some circumstances, directors can be personally liable for their actions as a director, even though the company has limited liability.
PIB Insurance Brokers arranges D&O cover for private companies, charities, not-for-profit organisations and growing businesses with investors. A broker can be particularly helpful when your situation is more complex, for example investors or lenders on board, plans to raise money or sell, regulated activities, financial difficulty, or directors who sit on more than one board. For wider cover including employment claims, ask us about management liability insurance.
What directors and officers insurance covers
D&O policies usually combine a core of covers with optional extensions. The summaries below are general examples of what may be covered in each section; your policy schedule and wording decide what is and isn't covered in any claim.
Core covers
Personal liability of directors
Claims made against directors and officers personally, including defence costs, where the company can't or won't pay for them.
Watch for: Fraud and deliberate wrongdoing, and claims known about before the policy started.
Company reimbursement
The company's cost of indemnifying its directors for claims against them, where it's allowed to.
Watch for: Limits shared between directors and the company.
Investigation costs
Certain legal and representation costs of responding to formal investigations by regulators or other authorities.
Watch for: Routine regulatory visits, and fines that can't legally be insured.
Former and future directors
Directors who have left, and new directors who join during the policy, for acts in their role.
Watch for: Whether cover continues if the company is sold, merges or goes into insolvency.
Optional covers to consider
Employment practices liability
Claims from employees such as unfair dismissal and discrimination. Usually part of management liability insurance.
Watch for: Claims that began before the policy started.
Corporate legal liability
Claims against the company itself for wrongful acts.
Watch for: Contract disputes and claims better covered by other policies.
Extradition and crisis costs
Legal costs for extradition proceedings and public relations costs after a claim.
Watch for: Limits on these extensions.
Pension trustee liability
May cover trustees of an insured pension scheme against certain claims arising from alleged wrongful acts in carrying out their trustee duties.
Watch for: Losses from poor investment performance.
Who might make a claim against a director?
Claims against directors may come from many directions:
- Shareholders and investors: alleging decisions that reduced the value of their investment.
- Employees: alleging unfair treatment, often alongside a claim against the company.
- Lenders, customers and suppliers: alleging misleading statements about the company's position.
- Liquidators and administrators: if a company becomes insolvent, directors' decisions before insolvency may be examined.
- Regulators and authorities: investigations by bodies such as the Health and Safety Executive, HMRC or the Information Commissioner.
What D&O insurance does not cover
Typical limits across D&O policies:
- Problems that existed before the policy started: claims or circumstances you knew about before cover began are usually excluded.
- Deliberate acts: claims arising from deliberate wrongdoing, fraud or dishonesty are usually excluded.
- Injury and property damage: claims for bodily injury or property damage are commonly dealt with under other insurance, such as employers' liability or public liability, depending on the circumstances.
- Professional mistakes: claims about your advice or services need professional indemnity insurance.
- Fines and penalties: cover may be restricted or unavailable where a fine or penalty can't legally be insured, although defence costs may be covered.
- Claims by major shareholders: claims by large shareholders against the company's directors are often restricted.
- Claims above your limit: the policy pays up to its limit of indemnity, and anything above that is usually yours to pay.
Conditions matter too: claims may also be reduced or declined if policy conditions aren't met. Common examples: a claim or circumstance not reported promptly, in line with the policy's notification conditions, or incomplete information in the proposal form.
How much does D&O insurance cost?
There is no standard price. What you pay depends on your turnover and financial position, your sector, whether you have investors or plan to raise money or sell, the number of directors, the limit you choose and your claims history.
What affects the cost
- Financial position: insurers usually ask for recent accounts. Losses or high borrowing may increase the cost.
- Sector and activities: regulated activities and overseas operations usually cost more to insure.
- The limit you choose: a higher limit usually costs more.
- A clean claims record: insurers usually look at the last three to five years.
Why work with PIB Insurance Brokers
We explore your options
We can approach insurers that cover D&O and set out the differences in cover, not just price.
We look at your company
Investors, lenders, regulated activities and plans to raise money or sell may each change what you need.
We look for common gaps
A limit shared with the company that's too low, no cover for former directors, or exclusions for insolvency.
Here when things change
Our team is on hand throughout the policy year for advice, whether your circumstances change or you're not sure what to do next.
What our clients say
Reviews from PIB Insurance Brokers clients across the sectors we work with, collected by Reviews.io.
A director or running a board? Check your personal cover.
Get a quoteFrequently asked questions
What does D&O insurance cover?
It covers directors and officers personally for claims alleging wrongful acts in running the company, including defence costs, compensation and the cost of responding to some investigations. It may also reimburse the company when it pays these costs on a director's behalf.
Do I need directors and officers insurance?
It isn't a legal requirement. But directors may be personally liable for their decisions, even in a limited company, and investors and lenders often expect it. It's worth considering if your company has employees, investors, borrowing or regulated activities.
Does D&O insurance cover former directors?
Usually, yes, for acts they carried out while they were directors, as long as the policy is in force when the claim is made. Check how long cover continues if the company is sold or stops trading.