Directors' and officers' liability

D&O insurance for mid-sized companies in the UK

Reviewed by the Apex broking team · Last reviewed 2026-10-16

D&O insurance for a mid-sized company is liability cover that protects its directors and officers, and usually the company, against claims alleging wrongful acts in running the business. It matters because growth brings more people with standing to sue directors personally, while the law limits how far the company can indemnify them.

Part of: Directors and officers insurance: UK guide

In short

A UK company is medium-sized under the Companies Act 2006 if it meets two of three tests: turnover up to £54 million, balance sheet total up to £27 million and no more than 250 employees. At that scale, directors answer to investors, lenders, a larger workforce and regulators, and insolvency claims become a real risk. D&O cover usually has three parts: Side A for directors when the company cannot indemnify them, Side B to reimburse the company when it does, and Side C for the company's own liability, commonly securities claims. Shared limits, exclusions and employment cover need checking at each renewal.

What counts as a mid-sized company

The Companies Act 2006 sets the size categories used for accounts and reporting. Under section 465, a company qualifies as medium-sized in a year if it meets two or more of these conditions:

turnover of not more than £54 million;
a balance sheet total of not more than £27 million;
not more than 250 employees.

The turnover and balance sheet figures were raised by the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 (SI 2024/1303), with effect from 6 April 2025 and subject to transitional provisions. Groups have equivalent tests in section 466, measured net or gross of intra-group eliminations.

These are accounting thresholds, not underwriting ones, but they are a useful marker: a business of this size has usually moved beyond founder-owners and a single bank facility, and its directors carry more personal exposure.

Why directors' exposure rises at this size

Most claims against directors concern how they exercised their statutory duties. Apex's guide to directors and the Companies Act 2006 covers the duties themselves. As a business grows, more parties have both a reason and the means to bring a claim.

Investors. Private equity or minority shareholders may allege misleading information in a funding round, or a breach of duty that reduced the value of their stake. See D&O when raising investment.
Lenders. Larger facilities bring covenants and reporting. If the business fails, creditors look closely at what the board knew and when.
Employees. With a workforce in the hundreds, discrimination, unfair dismissal and whistleblowing allegations become more frequent, and they often name individual managers as well as the company.
Regulators. Investigations by bodies such as the HSE, the ICO, HMRC or a sector regulator can involve interviews with directors and significant legal costs before any charge is brought. See health and safety prosecutions and D&O.
Insolvency. Under section 214 of the Insolvency Act 1986, a liquidator can ask the court to order a director to contribute to the company's assets if they knew, or ought to have concluded, that there was no reasonable prospect of avoiding insolvent liquidation or administration, and did not take every step they ought to have taken to minimise creditors' losses. See D&O insurance and insolvency.

How D&O cover responds: Side A, B and C

Most D&O policies are built in three parts. The labels are market shorthand and each wording defines them differently, so the policy terms govern. More detail is in Side A, B and C cover explained.

Part	What it usually covers	When it matters
Side A	Loss of individual directors and officers that the company does not or cannot indemnify	Insolvency, or where the law does not allow the company to indemnify
Side B	Reimburses the company where it has lawfully indemnified a director	Routine claims and investigations where the company pays first
Side C	The company's own liability, commonly limited to securities claims; some private company wordings offer wider entity cover	Shareholder claims brought against the company and its directors together

Defence costs are usually advanced as they are incurred, subject to the policy terms and to repayment if dishonesty is later established. Cover for regulatory investigations, interviews and dawn raids varies widely between wordings; see defence costs and investigations cover.

Companies Act sections 232 to 234: why insurance fills the gap

Section 232 makes void any provision that exempts a director from liability for negligence, default, breach of duty or breach of trust in relation to the company. It also stops the company indemnifying a director against that liability, subject to the exceptions that follow.

Section 233 allows a company to buy and maintain insurance for its directors, and for directors of associated companies, against that liability.
Section 234 permits a qualifying third party indemnity for liability to people other than the company. It cannot cover criminal fines, regulatory penalties, defence costs in criminal proceedings where the director is convicted, or defence costs in civil proceedings brought by the company or an associated company where judgment goes against the director.

In practice, a company's indemnity has gaps that only insurance can fill. A claim brought in the company's name, for example by a liquidator or new owners, is one the company cannot lawfully indemnify, and an insolvent company cannot pay anyway. That is where Side A cover does its work. Whether fines or penalties are covered depends on the wording and on insurability in law.

Limits, exclusions and connected covers

Setting the limit

There is no statutory minimum D&O limit. Limits are usually set by reference to the balance sheet, the number of directors sharing the cover, investor or lender requirements and the likely cost of defending several people at once. The limit is normally an aggregate for the policy period, shared by every insured person and, where Side C applies, the company. Some mid-sized companies add a Side A-only limit reserved for individuals. A management liability package with one limit across D&O, employment practices and crime can leave less for directors than expected; see the shared limit trap.

Common exclusions

deliberate fraud or dishonesty, usually only once established by a final judgment or admission;
claims arising from circumstances known or notified before the policy started;
bodily injury and property damage, often with a carve-back for defence of health and safety or corporate manslaughter charges;
professional services, which belong under professional indemnity;
claims by major shareholders, in some wordings;
insured versus insured claims, usually with carve-backs for derivative actions, liquidators and employment claims.

Employment practices and entity cover

D&O usually covers directors named personally in an employment claim, but not the company's own liability. Employment practices liability (EPL) covers the company for claims such as discrimination, unfair dismissal and harassment, subject to the policy terms. With a workforce of this size, many businesses buy EPL as a section of a management liability policy or as a separate policy. See employment practices liability insurance.

Common misunderstandings

"The company indemnifies us, so we don't need D&O." Sections 232 and 234 limit what the company may indemnify, and an insolvent company cannot pay.
"Cover continues after we sell." D&O is written on a claims-made basis. If the policy lapses or the company changes hands, later claims about past acts may not be covered without run-off. See D&O run-off on sale or retirement.
"Our D&O covers every board seat we hold." Roles on charities, joint ventures or unrelated companies are usually covered only through an outside directorship extension. See outside directorships.
"D&O and management liability are the same thing." Management liability is a package that usually includes D&O alongside other sections. See management liability vs standalone D&O.

What to check

Whether the limit is shared with the company or other sections, and whether a separate Side A limit is worth having.
How the policy treats insolvency, including claims by liquidators and administrators.
Investigation and interview cover, and any sub-limits.
Who counts as an insured person: employees with management roles, shadow directors and former directors.
Severability and non-imputation, so one director's non-disclosure does not prejudice the others. See fair presentation and severability.
Whether subsidiaries acquired mid-term are covered automatically. See group companies insurance programmes.

Sources

Frequently asked

Is D&O insurance a legal requirement for UK mid-sized companies?

No. There is no general legal requirement for a UK company to buy D&O insurance. Section 233 of the Companies Act 2006 permits it rather than requiring it. In practice, investors, lenders and prospective non-executive directors often ask for it, and funding agreements can make it a condition.

What is the difference between Side A and Side B D&O cover?

Side A pays directors and officers directly when the company does not or cannot indemnify them, for example in insolvency. Side B reimburses the company when it has lawfully indemnified a director. Side A protects individuals and Side B protects the company's balance sheet. Both usually share the same policy limit.

Does D&O cover directors if the company becomes insolvent?

It can. Liquidators and creditors often scrutinise directors' decisions after a failure, and Side A is designed for situations where the company cannot indemnify its directors. Check that the policy has no broad insolvency exclusion and that liquidators' claims are carved back from any insured versus insured exclusion.

How much D&O cover does a mid-sized company need?

There is no set figure. Limits are usually based on the company's financial size, the number of directors, investor or lender requirements and the cost of defending several people at once. Because the limit is normally shared, companies often consider a higher limit or a separate Side A limit for individuals.

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Apex 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.