What is directors and officers insurance?

Limited company directors carry personal legal responsibilities that can, in certain circumstances, expose them to personal liability claims — including from shareholders, employees, regulators, and creditors. Directors and officers insurance is a specific policy designed to protect the personal assets of directors and senior managers against the financial consequences of such claims, independently of the company's general liability cover.

Directors and officers insurance — commonly referred to as D&O insurance — covers the personal legal liability of company directors and officers arising from decisions and actions taken in their capacity as managers of the business. It typically covers the cost of legal defence and any resulting compensation or settlements in claims brought against directors personally, including regulatory investigations and employment disputes brought by employees. It does not cover fraudulent or criminal acts.

D&O insurance is most commonly associated with larger companies, but it is increasingly relevant for early-stage businesses — particularly those raising investment, operating in regulated sectors, or employing staff. Many investors and non-executive directors require it as a condition of involvement. Our guide to directors and officers insurance explains when it is appropriate for UK founders and what it covers in practice.