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Directors and officers insurance protects your personal assets if you're sued over decisions made on behalf of your company. Here's what it covers, who needs it, and how much it typically costs.
Directors and officers insurance (D&O insurance) protects the personal assets of company directors, officers and senior managers if they're personally sued for an alleged wrongful act, error or breach of duty carried out while running the company. It's separate from any insurance the company itself holds, and it matters because directors can be held personally liable for decisions made on the company's behalf, even in small businesses.
Directors and officers insurance is usually built from three components, sometimes called Side A, B and C cover:
Cover typically responds to claims involving breach of duty, negligence, misleading statements, regulatory investigations and wrongful trading allegations, and it usually pays legal defence costs even where a claim turns out to be unfounded. It doesn't cover deliberate fraud or dishonesty.
Directors and officers insurance protects the personal assets of company directors, officers and senior managers if they're personally sued over decisions made while running the business. It's a form of liability cover that sits alongside, but separate from, any insurance the company holds in its own name.
The risk it covers is real and often underestimated: as a director, you can be held personally liable for an alleged breach of duty, negligence or wrongful act, even in a small company with no history of disputes. Directors and officers insurance is designed to cover legal defence costs and any damages or settlements that follow, so a claim doesn't put your house, savings or other personal assets on the line.
Insurers typically structure directors and officers insurance around three components, often referred to as "sides":
This distinction matters because a policy that only includes one or two of these components can leave gaps exactly when you need cover most.
Many directors assume their company's general business insurance already covers them personally if they're sued. It doesn't. Directors and officers insurance is the only policy designed specifically to protect your personal assets, separately from any cover the company holds.
Who's it for
Limited company directors
Directors can be held personally liable for decisions made on behalf of the company, and that risk isn't limited to large corporations. It applies just as much to small and medium-sized companies.
Sole-director companies and startups with external investors
Investors and shareholders increasingly expect directors and officers insurance to be in place before they invest, particularly once external funding is involved.
Non-executive directors
Non-executive directors can be held to the same standard of liability as executive directors, often with less day-to-day visibility of the decisions being made.
Charity and non-profit trustees
Charity trustees have distinct duties to the Charity Commission and can be personally liable for a breach of trust, even though they're often unpaid volunteers.
Companies going through growth, restructuring or insolvency
These periods carry heightened claim risk from creditors, employees or regulators, which is exactly when personal liability exposure tends to increase.
Directors and officers insurance is designed to respond when a director or officer is accused of getting something wrong while carrying out their role, even if the accusation later turns out to be unfounded. Cover typically extends to:
As covered above, most policies are structured around three types of cover: protection for the individual when the company can't indemnify them, reimbursement to the company for defending its directors, and cover for claims against the company entity itself.
Compare cover
We compare cover across a wide range of insurers to match your company's size and risk profile.
Directors and officers insurance has clear boundaries. It's not designed to protect directors from the consequences of deliberate wrongdoing, and most policies exclude:
These exclusions are a normal part of how liability insurance works, not a sign of a weak policy. Speaking to an advisor can help you compare exactly what's included and excluded before choosing a policy.
Directors and officers insurance and professional indemnity insurance are often confused, but they protect different people against different types of claim.
Directors and officers insurance protects individual directors and officers personally, against claims about how they governed and ran the company, such as breach of duty, negligence in decision-making, or misleading disclosures. Professional indemnity insurance protects the business itself, against claims that its professional advice, service or work caused a client a financial loss.
Many companies, particularly those offering professional services, need both types of cover because they protect different people from different kinds of claim.
Illustrative examples
There's no single answer to how much directors and officers insurance costs, because insurers price cover based on a company's individual risk profile. Several factors influence the premium, including:
Any cost figures you see quoted elsewhere are illustrative only and will vary by insurer, sector and circumstances. There's no guaranteed premium until an insurer has assessed your specific company, and comparing quotes from more than one insurer is the most reliable way to understand what directors and officers insurance is likely to cost for your business. For a broader look at pricing across different types of cover, see our business insurance costs explained guide.
Step by step
Confirm who needs to be covered
Decide whether cover needs to extend to all directors, named officers, or non-executive directors as well.
Decide on an appropriate indemnity limit
Base the limit on your company's size and risk exposure rather than simply matching last year's renewal.
Check what triggers cover
Confirm the policy responds to regulatory investigations and legal defence costs, not just settled claims.
Review the exclusions carefully
Pay particular attention to any prior-acts limitations, which can leave gaps if you're switching insurer.
Compare quotes from more than one insurer
Comparing options rather than accepting the first renewal price helps you understand what you're getting for the premium.
Charity trustees can be personally liable for a breach of trust or a failure to meet their regulatory duties, even though they're often volunteering their time and receive no pay for the role. Directors and officers insurance for non-profits and charities exists specifically to protect trustees from this exposure.
Charities face a distinct risk profile compared with commercial companies. Trustees have direct duties to the Charity Commission, there's no share capital or shareholders to absorb losses, and a claim becoming public can carry serious funding and reputational risk for the organisation as well as personal risk for the individuals involved.
If you're a charity trustee weighing up whether cover is necessary, it's worth remembering that being unpaid doesn't reduce your personal liability. Trustees carry many of the same legal duties as company directors, and directors and officers insurance can be arranged specifically around a charity's structure and risk profile.
Being an unpaid trustee doesn't reduce your personal liability. Charities are held to strict standards by the Charity Commission, and trustees can be personally on the hook for a breach of trust in much the same way a company director would be.
We compare directors and officers insurance across a wide range of insurers on your behalf, rather than routing you toward a single insurer's own policy. That means the starting point is your company's circumstances, not one provider's product.
You can access expert advice with no pressure to proceed at any stage, and you can walk away at any point with no obligation. Insurers offering directors and officers insurance in the UK are typically authorised and regulated by the Financial Conduct Authority.
This guide sits within our wider business insurance: the complete UK guide, which covers every type of cover a UK business might need. If you're weighing up cover for other risks, our key person insurance guide explains what happens if a key individual in your business can't work, and you can compare the best business insurance providers across a wide range of insurers.
If you'd like impartial guidance alongside broker advice, MoneyHelper (0800 138 7777) offers independent money guidance backed by the government.
Common questions
Directors and officers insurance protects the personal assets of company directors, officers and senior managers if they're personally sued for an alleged wrongful act, error or breach of duty carried out while running the company. It's separate from any insurance the company holds in its own name.
Directors and officers insurance is relevant to limited company directors of any size, sole-director companies and startups with external investors, non-executive directors, charity and non-profit trustees, and companies going through growth, restructuring or insolvency. Personal liability isn't limited to large corporations, so even directors of small companies can benefit from cover.
The insurance policy for directors and officers is usually built from three components: cover for individual directors when the company can't indemnify them, reimbursement to the company for defending its directors, and cover for claims made against the company itself. Together these are often referred to as Side A, B and C cover.
D&O insurance typically covers breach of duty or trust, negligence, errors or misleading statements, regulatory and criminal investigations, wrongful trading, and director disqualification proceedings. It usually pays legal defence costs too, even where a claim is ultimately unfounded. It doesn't cover deliberate fraud or dishonesty.
Sole-director companies can face the same personal liability risks as larger companies, and investors and shareholders increasingly expect D&O insurance to be in place before they invest, particularly once external funding is involved. Whether cover is necessary depends on your company's specific circumstances, so it's worth speaking to an advisor to weigh up the risk.
Yes, directors and officers insurance can be arranged specifically for charity and non-profit trustees. Trustees have direct duties to the Charity Commission and can be personally liable for a breach of trust, even though they're often unpaid volunteers, which is why dedicated cover exists for this group.
Directors and officers insurance protects individual directors and officers personally against claims about how they governed the company, such as breach of duty or wrongful trading. Professional indemnity insurance protects the business itself against claims that its professional advice or service caused a client a financial loss. Many companies need both, because they cover different people and different types of claim.
The cost of directors and officers insurance varies depending on factors like company size and turnover, sector and risk profile, the number of directors covered, claims history, and the indemnity limit chosen. Any figures quoted elsewhere are illustrative only, and comparing quotes from more than one insurer is the most reliable way to understand what cover is likely to cost your business.
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