What is directors’ and officers’ insurance?
Directors’ and Officers’ Insurance provides essential protection for company directors and officers. It covers your legal defence costs and any damages you may be legally required to pay to other parties as a result of a wrongful act committed in your role.
This protection can include claims arising from:
- Actions by liquidators who suspect wrongful trading or improper payments to creditors
- Actions by HMRC related to suspected insolvent trading or misappropriation of tax payments
- HSE investigations where negligence is alleged
- Police or SFO investigations where fraud is suspected
With Directors’ and Officers’ Insurance, you can carry out your responsibilities with confidence, knowing you have coverage for potential legal and financial exposures.
What Does Directors and Officers Insurance Cover?
At Nova Insurance, our Directors and Officers cover is built around the real responsibilities that company leaders carry. A policy can be shaped to suit your business, and typical cover options include the protection set out below.
Legal Defence Costs
If a claim is brought against you personally, the policy can meet the cost of defending it, including solicitor and barrister fees, court costs and expert reports, often from the moment an allegation is made rather than only once liability is decided.
Wrongful Act Claims
Cover responds to allegations of a wrongful act such as a breach of duty, a mistaken decision, a misleading statement or an act of neglect carried out in your role as a director or officer.
Investigation and Regulatory Costs
If a regulator or official body opens an investigation into you or the company, the policy can cover the cost of legal representation and your attendance at interviews and hearings.
Employment Practices Claims
Claims from employees or former employees, for example over unfair dismissal, discrimination or workplace grievances, can be included so that both you and the business are protected.
Why Nova Insurance?
Arranging cover for company directors and officers takes a clear understanding of the responsibilities and exposures that come with running a business. Our experienced UK based team can guide you through the whole process, explain your options in plain language and help you put the right protection in place. Calls are completely free, as we use 0800 numbers, and our advisers are available six days a week.
Specialist Knowledge of Management Liability
Our advisers understand how claims against directors and officers arise and what strong protection looks like. We take the time to learn about your role and your business so that the cover we recommend genuinely fits.
Cover from Leading UK Insurers
We work with trusted names such as Aviva, AXA, Allianz, QBE and Zurich, comparing options so that you receive strong protection at a competitive price rather than a policy that only looks cheap.
Straightforward Claims Support
If a claim is made against you, our dedicated claims team handles the process on your behalf and keeps you informed at every stage, so you can stay focused on running the business.
The Risks Facing Company Directors
Taking on the role of a director or officer means accepting a level of personal responsibility that many people underestimate. Decisions made in good faith can still be challenged, and a claim can be brought by a wide range of parties, including shareholders, investors, employees, creditors, competitors, regulators and members of the public.
Your personal assets can be exposed
What surprises many directors is that their own savings and property can be at risk if a claim succeeds and there is no policy in place to respond. Directors and Officers Insurance exists precisely because the individual, and not only the company, can be held to account.
Common Claims Against Directors and Officers
Claims can come from almost any direction and are rarely expected. Some of the most common situations we see include allegations of a breach of duty, a failure to comply with legislation, a misleading statement to investors, a health and safety failing, a data protection breach and disputes over how company money has been managed.
Defence costs alone can be significant
Even where an allegation is eventually shown to be without merit, the cost of defending it can run high. A policy is designed to meet those costs so that a single dispute does not threaten your finances or the future of the business.
Who Needs Directors and Officers Insurance?
Directors and Officers Insurance is not only for large public companies. Any organisation with people in positions of responsibility can benefit, including private limited companies, family businesses, start ups, charities, clubs and associations.
The cover follows the role, not the size of the business
Non executive directors, trustees, company secretaries and senior managers are all exposed in similar ways. If you make decisions that affect employees, finances or the direction of a business, this cover is worth considering.
Risk Scenarios a D&O Policy Can Respond To
Claims against directors and officers take many forms. The scenarios below are among the most common reasons a policy is called upon, although the exact wording of any cover will depend on the policy you choose.
Breach of Fiduciary Duty
Directors owe a duty to act in the best interests of the company and its shareholders. A policy can respond where a director is accused of putting other interests first or of failing to take reasonable care over a decision.
Shareholder Actions
Shareholders may take legal action where they believe the company has been mismanaged or that its leaders have failed to act properly. Cover can meet the cost of defending these claims and any damages awarded.
Financial Reporting and Disclosure Errors
Claims can follow from accounts, statements or reports that are alleged to be inaccurate, incomplete or misleading, whether the error was made by the individual or relied upon by others.
Misrepresentation During Fundraising
When a company raises money or issues a prospectus, any statement later claimed to be misleading, or any important detail said to have been left out, can lead to a claim against those responsible.
Regulatory Investigations
If a regulator or official body examines the conduct of a director or the company, a policy can cover the cost of legal representation, preparing evidence and attending interviews or hearings.
Corporate Manslaughter and Creditor Claims
Cover can extend to allegations linked to a death caused by the organisation, and to claims brought by creditors where a company can no longer meet its financial obligations.
What Directors and Officers Insurance Does Not Cover
No policy covers everything. Knowing the usual exclusions helps you see exactly where a D&O policy protects you and where it does not. The following are commonly excluded, although the precise terms vary between insurers.
Deliberate Fraud
Losses that arise from dishonest or fraudulent conduct a director or officer carried out knowingly are not covered.
Intentional Criminal Acts
Claims that follow from a deliberate criminal act by the individual fall outside the protection a policy provides.
Illegal Personal Gain
Where a director or officer has received a payment or benefit they were not legally entitled to, the policy will not respond to the return of that gain.
Known or Prior Matters
Issues that were already known about, or claims and circumstances that arose before the policy began, are usually excluded.
Uninsurable Fines and Penalties
Certain fines and penalties imposed by regulators cannot be insured under law, so a policy is unable to meet them.
