FCA authorised · FRN 724952 0117 325 0027Quote & buy →
Insurance explained
D&O insurance for healthcare boards is cover that protects directors, trustees and senior managers of independent health and care organisations against claims and investigations about their management decisions. It matters because boards answer for governance, not just clinical care.
Part of: Commercial insurance
In short
Directors and trustees of private hospitals, hospices, health charities and care groups face personal exposure from regulators, employees, funders and creditors. CQC regulations require fit and proper directors and effective governance, and some breaches are criminal offences. D&O or management liability insurance commonly pays defence costs and covers damages for wrongful management acts, subject to the policy terms. It usually sits alongside medical malpractice cover, which responds to treatment claims. Charity trustees may buy trustee indemnity insurance from charity funds under section 189 of the Charities Act 2011, subject to conditions.
Directors' and officers' (D&O) insurance covers individuals who run an organisation against allegations that they made a wrongful act in that role, such as a breach of duty, a misleading statement or poor oversight. In the health and care sector it is often bought as part of a management liability package that adds employment practices and crime cover. Our D&O guide explains the basics, and Side A, B and C cover explains how the policy pays individuals and reimburses the organisation.
Policies are normally written on a claims-made basis: the policy in force when a claim or investigation is first notified is the one that responds. Defence costs are usually paid as they arise, subject to insurer consent, which matters because regulatory and employment matters can run for a long time before any finding.
This page is about independent providers. NHS trusts are generally in a different position: NHS Resolution's Liabilities to Third Parties Scheme says it extends to cover the personal liabilities of members of NHS boards, including non-executive directors.
Providers registered with the Care Quality Commission must meet the Health and Social Care Act 2008 (Regulated Activities) Regulations 2014. Regulation 5 requires a provider that is a body, other than a partnership, not to appoint or keep a director, or a person performing similar functions, unless they meet the fit and proper person requirements, including good character and no involvement in serious misconduct or mismanagement. Regulation 17 requires systems and processes to be established and operated effectively to assess, monitor and improve quality and safety. CQC's well-led key question looks at exactly these governance arrangements.
Under regulation 22, failing to comply with certain requirements is an offence, including parts of the good governance and duty of candour regulations, and failures under regulations 12, 13(1) to (4) and 14 where they result in avoidable harm, significant risk of harm or, in some cases, loss of a service user's money or property. D&O policies commonly pay defence costs for investigations and prosecutions but do not normally pay criminal fines, which are generally uninsurable. See health and safety prosecutions and D&O.
Most hospices and many health charities are registered charities, so trustees also answer to the Charity Commission, donors and commissioners. Our page on D&O for charities covers trustee duties in more depth.
Large clinical and care workforces bring tribunal claims, whistleblowing disputes and allegations against named managers, which employment practices liability addresses. Funding pressure can also raise insolvency and wrongful trading risk for company boards. If a company enters insolvency, an administrator or liquidator may examine directors' decisions in the period before, and claims can follow; see D&O and insolvency.
Hospices and health charities often handle large volumes of donations, legacies, retail income and lottery proceeds. A loss through internal fraud can lead to questions about the board's controls as well as the loss itself. Management liability packages commonly offer crime cover for employee dishonesty and some external fraud, subject to the policy terms.
Health and care organisations regularly merge, transfer services or take on contracts from other providers. Each change can alter who the insured entities are, which board members are covered and which policy responds to claims about pre-merger decisions. Boards should check this before the transaction completes, not after.
Cover varies by insurer and wording. The table shows common positions, always subject to the policy terms.
| Usually covered | Usually excluded or covered elsewhere |
|---|---|
| Defence costs for claims alleging wrongful management acts | Criminal fines and most regulatory penalties |
| Costs of responding to regulatory investigations, where the wording includes them | Claims for injury from clinical treatment, which belong under medical malpractice |
| Damages and settlements for covered claims | Deliberate fraud or dishonesty, once established |
| Employment claims, if EPL is included | Known circumstances before the policy began |
| Losses from employee theft, if crime cover is included | Bodily injury and property damage, normally under liability policies |
For charities, section 189 of the Charities Act 2011 lets trustees buy indemnity insurance from charity funds if they are satisfied it is in the charity's best interests. The policy must exclude fines, regulatory penalties, defence costs of criminal proceedings ending in conviction for fraud, dishonesty or wilful or reckless misconduct, and liability to the charity for conduct the trustee knew, or must be assumed to have known, was not in its interests.
A common misunderstanding is that a provider's medical malpractice insurance protects the board. Medical malpractice, or treatment liability, responds to patients alleging harm from care. D&O responds to allegations about how the organisation was run. The two can meet: a serious incident might produce a treatment claim against the provider and, later, an inquiry, a regulatory investigation or an employment claim focused on what the board knew. Many D&O wordings exclude bodily injury claims but write back defence costs for directors in some situations, so read both policies together.
See insurance for CQC-registered providers for how the main covers fit together.
These examples are illustrative and not based on any client.
Our guide to D&O for healthcare companies adds more detail. Apex arranges D&O and management liability for health and care boards; a broker reads every enquiry.
There is no general legal requirement, but many hospice boards buy trustee indemnity or D&O cover because trustees can face personal claims and regulatory enquiries. Section 189 of the Charities Act 2011 allows it to be paid from charity funds if trustees decide it is in the charity's best interests, subject to required exclusions.
Many policies cover the costs of responding to regulatory investigations into insured persons, subject to the wording and the definition of investigation. Fines are usually excluded. Check when cover is triggered, whether provider-level inspections count, and whether costs need insurer consent.
No. Medical malpractice covers claims from patients alleging harm from treatment. D&O covers directors and officers against allegations about how the organisation was managed. A serious incident can lead to both, so the two policies should be reviewed together.
NHS trusts are generally covered through NHS Resolution's risk pooling schemes. NHS Resolution says its Liabilities to Third Parties Scheme extends to the personal liabilities of members of NHS boards, including non-executive directors. Independent providers usually arrange their own cover.
Regulation 5 of the 2014 Regulated Activities Regulations requires a provider that is a body, other than a partnership, not to appoint or keep a director unless they are of good character, have the right skills and experience, are able to do the role and have not been involved in serious misconduct or mismanagement.
Tell us what your business does, your turnover and any claims. A broker reads every enquiry and comes back with options. No fee for a quote. Or call 0117 325 0027.
Start a D&O quote Request a callbackApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.
