The Federation of Master Builders

Your Liability as a Company Director Explained

Published date: 24 October 2023

As a director or key manager, there are a range of claims that could be made against you. And while many businesses are covered against these claims, you as an individual might be unprotected. That’s where Directors and Officers insurance (D&O insurance) comes in.


What is Directors and Officers Insurance?

D&O is unique. While other insurance policies safeguard the overall business and its reputation, D&O insurance specifically protects the people behind it. This type of insurance policy is designed to shield the directors and key managers from the significant financial costs of allegations made against them. They could be accused of knowingly disregarding health and safety regulations, or being negligent in the course of their daily duties. 


As a director or manager, you would be obliged to pay the cost of any legal defence, awards or settlement payment that occurs because of the claims made against you. If any of these situations arise, it’s extremely beneficial to know that you have D&O insurance to take care of these costs.

What & Who does Directors and Officers Insurance cover?


D&O Insurance is a flexible policy which can provide cover for senior members of an organisation, including executive and non-executive offices, managerial and supervisory employees, and non-executive directors. The majority of D&O insurance policies cover all current, future and past directors and officers of a company and it's subsidiaries.


This insurance policy typically provides protection against events such as:

  • Misleading statements
  • Financial reporting errors
  • Negligence
  • Failure to comply with regulations or laws
  • Breach of duty
  • Breach of trust


What is not covered by D&O insurance?

It's crucial to note that D&O insurance does not cover deliberately fraudulent, criminal, or intentional non-complaint acts. In cases where guilt is uncertain before a trial, insurers may provide an initial payment but decline further coverage upon a guilty verdict. This insurance is tailored to protect individuals acting in their roles as directors or officers and doesn't extend to claims against the entire organisation.


Do you need Directors and Officers Insurance?


If your company has directors or key managers, directors’ and officers’ liability insurance can financially safeguard them against compensation claims lodged by shareholders, investors, employees, regulators, or third parties.


Directors and crucial management staff without insurance are at a greater risk of being unable to defend themselves against severe claims. Consequently, they may face disqualification from directorship, face substantial financial burdens from civil proceedings and subsequent awards and damages, or even undergo criminal prosecution, possibly resulting in fines and imprisonment.


Given the increasing potential for litigation and risks faced by directors and officers, D&O insurance is crucial for protecting individuals in the workplace.


For more information or to receive a quote you can contact the FMB Insurance team on 01353 652760 or email [email protected]

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