Directors and Officers insurance (D&O) — UK 2026 guide
D&O insurance protects directors and officers personally against claims arising from their conduct in the management of the company. Under Companies Act 2006, directors owe six statutory duties — and breach exposes personal assets. D&O is the standard mechanism to protect directors from that exposure.
The Companies Act 2006 director duties
Directors owe six statutory duties to the company under sections 171-177 Companies Act 2006:
- Duty to act within powers. Section 171.
- Duty to promote the success of the company. Section 172.
- Duty to exercise independent judgement. Section 173.
- Duty to exercise reasonable care, skill and diligence. Section 174.
- Duty to avoid conflicts of interest. Section 175.
- Duty not to accept benefits from third parties / declare interests. Sections 176-177.
Breach of any of these duties creates civil liability. Damages come from personal assets unless D&O responds.
What D&O covers
- Defence costs for claims against directors, whether valid or not.
- Damages and settlements where director found liable.
- Investigation costs for regulator inquiries.
- Extradition costs in some wordings.
- Insured's post-departure claims via extended reporting periods.
Standard cover levels
- £1m limit: sole director / small firm.
- £2m limit: standard SME.
- £5m limit: mid-size firm.
- £10m+ limit: firms with material corporate exposure, non-exec directors, PLC status.
When management liability makes more sense than standalone D&O
For firms with employees and client-fund handling, standalone D&O misses employment-practices liability and crime exposure. Management liability bundles all three at typically 30-40% saving vs three standalone policies.
Rule of thumb: sole practitioners without employees may only need standalone D&O. Firms with 5+ employees typically benefit from management liability.