What is directors' and officers' (D&O) insurance?
Reviewed by Apex Insurance Brokers · Last reviewed 2026-08-05
In short: Directors' and officers' (D&O) insurance protects the personal assets of company directors, officers and senior managers when they are held personally liable for decisions taken in their role. It covers legal defence costs, settlements and damages arising from claims of mismanagement, breach of duty, regulatory breaches or misleading statements — brought by shareholders, employees, regulators, creditors or other third parties.
Running a company carries personal legal exposure that many directors never see coming. Under UK law, a director's liability is not always limited by the company's own limited-liability status. If a director breaches their statutory duties or a claimant alleges a wrongful act in the way the business was managed, they can be pursued personally — and their home, savings and other assets can be at risk. D&O insurance exists to stand between that exposure and the individual.
What D&O insurance actually covers
A D&O policy responds to claims alleging a "wrongful act" by an insured person acting in their capacity as a director or officer. In practice this typically includes:
- Legal defence costs — often the single largest cost, even where a claim is ultimately unfounded.
- Breach of fiduciary or statutory duty — including duties owed under the Companies Act 2006, such as the duty to promote the success of the company and to exercise reasonable care, skill and diligence.
- Alleged mismanagement or negligence in running the business.
- Regulatory investigations and actions — including investigation costs when a director is required to attend or respond to a regulator such as the Financial Conduct Authority, the Health and Safety Executive or the Information Commissioner's Office.
- Employment-related claims against individual managers, such as alleged discrimination, harassment or wrongful dismissal.
- Misleading statements to shareholders, investors or the public.
- Wrongful trading and insolvency-related claims, where a liquidator or creditor pursues directors after a company fails.
Cover is usually arranged across three "sides": Side A protects individuals directly where the company cannot indemnify them; Side B reimburses the company when it has indemnified its directors; and Side C (entity cover) can extend to the company itself, most commonly for securities claims.
What it typically does not cover
D&O is not a catch-all. Policies generally exclude:
- Fraud, dishonesty and criminal conduct that has been proven or admitted (defence costs may be advanced until then).
- Deliberate breaches of the law for personal profit or advantage.
- Bodily injury and property damage — these belong under public liability or employers' liability.
- Professional service errors delivered to clients — that is the role of professional indemnity insurance.
- Fines and penalties that are uninsurable by law.
Because D&O and professional indemnity are often confused, the distinction matters: D&O protects the individual for management decisions; professional indemnity protects the business for the advice or service it provides to clients.
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Who needs directors' and officers' insurance?
A common misconception is that D&O is only for large listed companies. In reality, the personal exposure applies the moment someone takes on a directorship or a senior officer role — and smaller companies often have the least ability to absorb a large legal bill. You should seriously consider D&O cover if you are:
- A director or company secretary of a private limited company, however small.
- A senior manager or officer with real decision-making authority.
- A trustee or director of a charity, club or not-for-profit (often arranged as trustee indemnity cover).
- A start-up founder raising investment, where investors frequently require D&O as a condition of funding.
- A business employing staff, entering contracts, holding data or operating in a regulated sector.
If your company has creditors, employees, shareholders, investors or a regulator, the people at the top have exposure. Even a claim that is eventually dismissed can generate significant defence costs, and directors would otherwise fund that personally.
D&O vs. other business covers
| Cover | Protects | Typical trigger |
|---|---|---|
| D&O | Individual directors and officers | Alleged wrongful act in managing the company |
| Professional indemnity | The business | Negligent advice or service to a client |
| Employers' liability | Employees | Injury or illness caused by work |
| Public liability | Third parties | Injury or property damage to the public |
Employers' liability insurance is compulsory for most UK employers. D&O is not a legal requirement, but it is frequently expected by investors, lenders and prospective board members — and many senior candidates will not accept a directorship without it in place.
How limits and cost are set
D&O is arranged with an indemnity limit — commonly offered as generic options such as £1m, £2m or £5m — representing the maximum the insurer will pay. The right limit depends on your company's size, sector, financing arrangements, number of directors and claims history. Premiums vary widely, so it is worth having a broker benchmark cover against your specific risk profile rather than defaulting to the cheapest option. A well-structured policy will also clarify how defence costs sit within or in addition to the limit, which materially affects the protection available.
Speaking to a broker helps you match the wording, limit and exclusions to your actual exposure. Request a D&O quote from Apex and we will help you size the cover correctly.
Common questions
Is D&O insurance a legal requirement in the UK?
No. Unlike employers' liability insurance, D&O is not compulsory. However, it is often a condition of investment or lending, and many directors treat it as essential given their personal exposure under the Companies Act 2006.
Does D&O cover the company or the individual?
Primarily the individual. Side A protects directors and officers directly, Side B reimburses the company for indemnifying them, and optional entity (Side C) cover can extend to the company itself for certain claims.
Do small companies really need D&O?
Often yes. Personal liability attaches to the role, not the company's size, and smaller businesses are usually least able to absorb the defence costs of a claim — even one that is ultimately unsuccessful.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for your policy wording.