Protects directors, trustees and senior officers from personal financial liability if they're sued over decisions made running the company. Here's what it covers, who needs it, and why company size is no protection.
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D&O insurance protects individual directors and officers — not the company itself — against claims arising from decisions made in running the business.
Directors of UK companies take on statutory duties that create genuine personal exposure — regardless of company size.
Sections 171–177 impose statutory duties on directors — to act within their powers, promote the success of the company, exercise independent judgment, and avoid conflicts of interest. Breach of these duties can lead to personal claims.
Under the Insolvency Act 1986, directors who continue trading once they knew or ought to have known the company had no reasonable prospect of avoiding insolvency can be made personally liable for company debts.
Bodies such as HMRC, the Insolvency Service, HSE and, for regulated firms, the FCA can investigate individual directors' conduct. Most D&O policies extend to cover the legal costs of responding, even where no wrongdoing is ultimately found.
Trustees of charities and not-for-profits owe similar duties under charity law and can face personal liability. D&O (sometimes called trustee indemnity insurance in this context) is widely used across the charity sector for this reason.
The right limit depends on company size, sector, and whether you have outside investors or lenders.
A common starting point for small private companies with modest turnover and no external investors.
Typical for growing SMEs, especially those with several directors, external shareholders, or moderate borrowing.
Often expected by venture capital or private equity investors as a condition of investment.
Common for larger businesses, regulated firms, and companies with significant contractual or lending exposure.
A few things worth checking before you buy, whichever UK insurer or broker you compare.
D&O is almost always written on a claims-made basis — cover depends on holding a live policy (or valid run-off cover) when a claim is made, not when the alleged conduct occurred.
When a company is sold, wound up, or a director resigns, arrange run-off cover — claims can still emerge years after the event that triggered them.
Check exclusions carefully — fines and penalties are generally uninsurable as a matter of UK public policy, though defence costs in responding to a regulatory investigation are typically covered.
Before buying, confirm any insurer or broker is authorised and regulated by the Financial Conduct Authority — check the register at register.fca.org.uk.
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