Has your business got Directors and Officers insurance?
April 9, 2025It can be a risky business taking on the role of a director or an officer of a company in the UK. Any decision you take – or fail to take – may be challenged by shareholders, investors, employees, regulators or third parties. The consequences can be financially crippling, so Directors and Officers insurance (commonly known as D&O insurance) exists to cover the costs of any claims and compensation that is awarded.
In other words, D&O insurance could prove critically important – yet many businesses overlook its need.
What is Directors and Officers insurance?
As the Association of British Insurers (ABI) explains, a wide array of individuals and organisations may claim against individual directors and officers (senior managers) of your business alleging “wrongful acts”.
These are decisions for which the directors and officers are personally liable under British law – including the regulatory authorities.
Company Directors and Officers insurance indemnifies any such individuals held responsible for any decisions amounting to wrongful acts.
What does Company Directors and Officers insurance cover?
D&O insurance provides company directors and officers indemnity against claims alleging “wrongful acts” in the decisions they have taken.
“Wrongful acts” cover a wide variety of activities for which the individual directors or officers are legally responsible – at the risk of being personally liable. Those acts include:
- mistakes or errors;
- misleading statements;
- neglect;
- breach of duty;
- breach of trust; and
- wrongful trading.
Company Directors and Officers insurance offers financial cover against claims of negligence in these and any other areas of corporate decision-making.
Why is it so important?
D&O insurance, therefore, frees the directors and senior management of any business from worries about the decisions they are making. The protection of insurance allows the freedom to make – sometimes bold – decisions in the best interests of the company, irrespective of the risk to individuals making those decisions. The business may gain a reputation for its bold leadership.
That is a freedom and confidence in decision-making that is likely to prove especially attractive to shareholders and investors. Knowing that decisions by the senior managers and directors are safely indemnified may attract the levels of investment sought by any business with growth in its sights.
What is true for shareholders and investors also goes for employees of the business. You may be able to attract candidates with greater experience and talents if they know that their own decisions – as reflected in those taken by senior management and the directors themselves – are recognised by the D&O insurance in place.
A further area in which D&O insurance is likely to provide valuable financial security for your business is through scrutiny by the various regulatory authorities.
Businesses in the UK are already subject to strict regulation – with companies in the financial sector under constant scrutiny. Defending against probes by any regulator – including those where criminal charges might eventually be involved – can be an expensive business.
D&O insurance is designed to provide valuable indemnity against those potential costs.
Get a quote for D&O insurance
Although Directors and Officers insurance may be overlooked by many UK businesses, it is clear that it could provide a make or break financial protection not only for the senior management and directors involved by also the company itself.
For more information about this insurance product, how it might offer some of the protections your current arrangements may be lacking, and for what we believe is a competitive D & O insurance quote, don’t hesitate to contact us here at Alan Blunden or call us on 01702 826060.