Reviewed by Matthew Bartlett, Director · Last reviewed 9 July 2026
Directors and officers insurance (D&O) is the cover that responds when a director, officer or senior manager is personally sued or investigated in connection with the way they run a company. In UK law a director’s personal assets sit behind the decisions they take at board level, and the last decade has widened the range of claimants who can reach for those assets. This guide sets out what D&O actually pays for, why the Companies Act 2006 exposure sits behind every director, how the three ‘sides’ of a policy work, where D&O ends and professional indemnity begins, and the questions Apex asks when we place a programme.
The Companies Act 2006 codified the seven general duties of a director at sections 171 to 177. Those duties — to act within powers, to promote the success of the company, to exercise independent judgement, to exercise reasonable care, skill and diligence, to avoid conflicts of interest, not to accept benefits from third parties, and to declare interests in proposed transactions — are owed by the director to the company personally. A breach can be pursued by the company itself, by a liquidator on behalf of the company’s creditors, or by a shareholder using the derivative claim procedure at sections 260 to 264.
The exposure widened again with the Insolvency Act 1986. When a company is heading into insolvency the director’s duty shifts under section 172(3) to take account of creditor interests, and sections 213 (fraudulent trading), 214 (wrongful trading) and 246ZA/246ZB (fraudulent and wrongful trading in administration) let a liquidator or administrator pursue directors personally for a contribution to company assets. The Company Directors Disqualification Act 1986 sits alongside as a regulatory route: a disqualification order under section 6 is a matter that a director defends personally.
Layer on top the specific statutory regimes — the Financial Conduct Authority’s Senior Managers and Certification Regime (SMCR) for authorised firms, the Building Safety Act 2022 for higher-risk residential buildings, the Health and Safety at Work etc. Act 1974 for workplace incidents, the Bribery Act 2010, the Corporate Manslaughter and Corporate Homicide Act 2007, and the Charities Act 2011 for trustees — and the point is straightforward: a UK director can be pursued personally on multiple fronts and none of those routes are hypothetical.
Modern D&O policies are structured in three ‘sides’. The distinction matters because each side responds to a different type of claim, and understanding them is the difference between buying a programme that works and a programme that pays out but not to the person you wanted paid.
Side A pays the director directly. It responds when the company is legally prohibited from indemnifying (section 232 of the Companies Act limits how far a company can indemnify a director), when the company is insolvent, or when the company simply refuses. In practice Side A is the cover a non-executive director should focus on: it protects personal assets when the corporate wrapper is no longer there to help.
Side B pays the company back when the company itself has indemnified a director under its articles or a separate indemnity deed. This is the working part of the programme for most executive-led claims. If a director is named in a shareholder action and the company steps in to fund the defence, Side B reimburses the company for that spend.
Side C covers the company itself, but only in respect of securities claims. It is normally offered where the company has publicly traded shares or bonds; a wider ‘entity’ extension is available on some private-company wordings but typically only for defined trigger events. Side C is the reason the total policy limit can be depleted quickly by a large securities claim, which is why sophisticated buyers ring-fence a separate Side A tower.
Regulatory investigation is the most common trigger. When the FCA opens a section 165 request, when HMRC issues a Schedule 36 information notice against a director personally, when the Charity Commission opens a statutory inquiry under section 46 of the Charities Act 2011, or when the Serious Fraud Office issues a section 2 notice, the legal costs of defending the individual’s position are exactly what D&O responds to. Most policies extend to pre-claim investigation costs specifically because the biggest ticket is often the pre-charge or pre-notice phase.
Shareholder actions are the second major head. UK derivative claims under Companies Act sections 260 to 264, unfair-prejudice petitions under section 994, and disputes arising from a share sale (SPA warranty and indemnity actions) all attach to the individuals who signed the resolutions or the disclosure schedule. Employment practices liability — the individual director sued alongside the company for constructive dismissal, discrimination, or whistleblowing detriment under the Employment Rights Act 1996 — is a third head, often written as an extension rather than the core grant.
Insolvency is the fourth and most severe head. Wrongful trading claims under section 214 of the Insolvency Act 1986 are personal to the director. Misfeasance applications under section 212 are pursued in the director’s name. Disqualification proceedings under the CDDA 1986 travel with the person, not the company. When a company fails, D&O is often the only wall standing between the ex-director and their own house.
The whistleblower retaliation claim. A finance director dismisses a management accountant who has raised concerns about revenue recognition. The accountant brings a claim in the Employment Tribunal under the Public Interest Disclosure Act 1996 provisions of the Employment Rights Act 1996 naming both the company and the finance director personally. The company’s employment practices liability cover picks up the corporate defence; Side A of the D&O programme covers the finance director’s named position, including counsel’s costs for the personal capacity.
The HMRC investigation of a director. HMRC opens a Code of Practice 9 investigation on the suspicion that a director has been party to deliberate tax fraud. Legal costs to defend the personal position through the disclosure and settlement process fall on the individual — the company cannot indemnify because the matter concerns the director’s personal tax affairs. Side A responds to the investigation costs; the tax liability itself is not covered.
The breach of directors’ duties claim. A minority shareholder brings a derivative claim under section 260 of the Companies Act 2006 alleging that the CEO diverted a corporate opportunity to a family member, in breach of the section 175 duty to avoid conflicts of interest. The company’s articles indemnify the CEO for defence costs; Side B reimburses the company for the defence spend as it is incurred. The eventual settlement or judgment on the merits sits outside cover if the court finds fraud or dishonesty was established, but the legal fees up to that finding are covered.
The employment tribunal against an executive. A former head of sales brings a discrimination claim under the Equality Act 2010 against the company and the sales director personally. The sales director is named individually because the alleged conduct was theirs. Side A and Side B of the D&O programme respond to the personal defence; where the employment practices liability cover is embedded in the D&O rather than a separate policy, the corporate defence sits alongside on the same tower.
D&O is not universal cover. The standard exclusions across UK-placed wordings include:
Conduct exclusions. Deliberate dishonesty, fraud, and improper personal profit are excluded once established by final adjudication. The wording matters — a ‘final adjudication’ standard means defence costs continue until a court has actually found the conduct proven, at which point they may become repayable.
Insured-versus-insured. Claims brought by one insured against another are usually excluded to avoid collusive claims. Standard extensions carve out shareholder derivative claims, employment claims, and claims brought by a liquidator or administrator, so read the carve-outs carefully.
Prior known circumstances. Anything the directors knew about, or reasonably should have known about, before inception. This is why the proposal form asks for the ‘deeming clause’ disclosure so specifically — the answer determines whether the tower responds at all.
Bodily injury and property damage. Left to public liability, employers’ liability, and product liability cover.
ERISA-equivalent claims. Pensions Act 2004 trustee liability sits on a separate policy in the UK; D&O will exclude what pension trustee liability should insure.
Almost every D&O policy in the UK market is written on a claims-made basis. That means a claim is only covered under the policy in force when the claim (or the circumstance that could give rise to a claim) is notified to insurers — not when the underlying wrongful act occurred. Late notification is the single most common reason a D&O claim gets declined.
The notification wording usually covers three triggers: an actual written demand or proceeding; a regulatory or governmental investigation; and a circumstance that a reasonable director would consider likely to give rise to a claim. That third head is where discipline matters. When a board minute records a concern — a whistleblower letter, an HMRC enquiry, a solicitor’s pre-action letter — that concern needs to reach the broker within the policy period, not once litigation is served.
Under the Insurance Act 2015 the commercial client owes a duty of fair presentation at inception, at every renewal, and on any material variation. For D&O that duty is unusually broad because material facts include anything a prudent underwriter would want to know about the individuals covered — historic regulatory contact, past civil litigation, disqualification history, and any current circumstance that could develop into a claim. Section 3 of the Act sets the standard and section 8 sets the remedies for breach.
Underwriting a D&O programme is different from underwriting most commercial covers because the underwriter is pricing the individuals as much as the company. The proposal form gathers financial information (last three years’ audited accounts, latest management accounts, going-concern position, funding runway), industry data (regulated sector, litigation history, US securities exposure), and individual information (directors’ declarations, prior claims, prior notifications made to any insurer).
Rating is driven by the balance sheet, the sector, and the story. A profitable, well-capitalised private company in a low-litigation sector with a stable board sits at one end; a pre-profit venture-backed company in a regulated sector with turnover of directors over the last two years sits at the other. The limit indicated by the underwriter is not a recommendation of the limit the buyer needs — that is a conversation between the board, the shareholders, and the broker.
Directors and officers insurance covers the individual’s liability for how they run the company. Professional indemnity insurance covers the company’s liability for the professional services it delivers to its clients. In a professional services firm the two policies live next to each other and the wording of each needs to align, because there are claims that can plausibly attach to either.
The classic overlap is the failed engagement that also allegedly involved a breach of directors’ duties — the PI insurer looks at the client-facing act; the D&O insurer looks at the board’s oversight of that engagement. A specialist broker aligns the wordings, the definitions of ‘insured’ and ‘claim’, and the notification triggers so that the client is not paying for double cover and not carrying a gap between the two.
The core statutory framework for a UK D&O buyer to be aware of, in one place:
Companies Act 2006 sections 171-177 (general duties); sections 232-238 (indemnification limits and permitted indemnities); section 234 (qualifying third-party indemnity provisions); sections 260-264 (derivative claims); section 994 (unfair prejudice). Insolvency Act 1986 section 212 (misfeasance), section 213 (fraudulent trading), section 214 (wrongful trading), sections 246ZA/246ZB (equivalents in administration). Company Directors Disqualification Act 1986 sections 6-10. Insurance Act 2015 sections 3, 7, 8 (fair presentation and remedies). Financial Services and Markets Act 2000 Part IX (SMCR). Building Safety Act 2022 section 135 (limitation extensions for defective premises). Bribery Act 2010 section 7 (failure to prevent) and section 14 (senior officer consent or connivance). Corporate Manslaughter and Corporate Homicide Act 2007.
Apex Insurance Brokers is FCA authorised (FRN 724952) and places directors and officers cover for UK companies across our sectors. We work with Lloyd’s syndicates and specialist company markets to structure programmes that reflect the actual board, the actual balance sheet, and the actual regulatory exposure — not a generic template. Where a client also carries professional indemnity, cyber or crime cover we co-ordinate the wordings so that a real claim finds a real home, first time.
We are a named-broker business: the person who arranges your cover is the person you speak to when a matter arises. Our client retention runs at 95% year on year, which we take as a signal that the model works.
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