Directors & Officers Liability Insurance
Protect the personal assets of your directors and officers against claims of wrongful management decisions — from regulators, shareholders, employees and creditors.
What is Directors & Officers Liability Insurance?
Directors & Officers (D&O) Liability insurance protects the personal assets of a company's directors and officers against claims arising from actual or alleged wrongful acts committed while managing the business — things like breach of duty, mismanagement, negligent oversight or misleading statements. Because directors can be held personally liable, cover typically responds even after the company itself has been wound up or is unable to indemnify them.
Who needs D&O insurance?
Any individual who sits on a board or holds an officer title carries personal exposure — this isn't limited to listed companies. Directors of private companies, close corporations, non-profits and FSPs can all be named personally in claims from shareholders, creditors, employees, regulators or liquidators.
What does D&O typically cover?
A standard D&O policy responds on three levels: Side A cover pays directors and officers directly when the company cannot or will not indemnify them; Side B reimburses the company where it has indemnified its directors; and Side C (entity cover) extends protection to the company itself for specific claims, such as securities claims. In all cases, the policy generally pays defence costs as well as any damages or settlement.
What does D&O exclude?
D&O cover does not respond to deliberate fraud, dishonesty or criminal conduct, and it will not indemnify fines or penalties that are uninsurable by law. Claims arising from conduct a director knew was wrongful at the time are also typically excluded, along with bodily injury and property damage, which fall under Public Liability.
What drives the cost of D&O cover?
Premiums are shaped by the company's turnover, industry, governance structure, number of directors, claims history and whether the business is regulated, listed or holds an FSP licence. Higher-risk industries and businesses raising external capital typically attract closer underwriting scrutiny.
What it covers
- ✓Defence costs for directors and officers facing management liability claims
- ✓Claims brought by shareholders, regulators, employees or creditors
- ✓Company reimbursement where the business indemnifies its directors
- ✓Claims arising after a director has resigned, retired or the company has closed, subject to policy terms
Who needs it
- Directors and officers of private companies, of any size
- Non-executive directors and board members of non-profit organisations
- FSPs and other regulated entities with heightened director accountability
- Founders and directors raising capital from investors or lenders
In practice
Common claims scenarios
Insolvent trading allegations
A liquidator alleges the board continued trading after the company was factually insolvent, exposing directors to personal claims from creditors.
Employment-related claims
A dismissed executive names individual directors alongside the company in a claim for unfair dismissal or discrimination.
Regulatory investigation
A regulator investigates the company's conduct and directors incur significant legal costs responding, even where no wrongdoing is ultimately found.
FAQ
Frequently asked questions
Yes — director liability is not limited to large or listed companies. Regulatory, employment and creditor claims can affect directors of businesses of any size, and personal assets can be at risk without cover.