D&O insurance for private companies: when directors are personally exposed
Who brings claims against directors?
Claims come from shareholders, creditors, regulators, employees, customers and, after an insolvency, liquidators. Private companies face these claims as well as listed ones.
What does a D&O policy pay?
Policies are usually built in three parts.
| Part | What it covers |
|---|---|
| Side A | Directors personally, when the company cannot indemnify them |
| Side B | The company, when it indemnifies its directors |
| Side C | The company itself, mainly for securities claims (listed companies) |
Which terms matter most?
Defence costs inside or outside the limit, the insured-versus-insured exclusion and its carve-backs, cover for former directors, and how the policy treats claims after a change of control.
When should a private company buy it?
Before raising capital, taking on outside directors, borrowing significantly or entering a regulated activity. Cover is written on a claims-made basis, so continuity matters.
Frequently asked questions
Does D&O cover fines?
Fines and penalties are generally excluded where the law prohibits insuring them.
Is D&O the same as professional indemnity?
No. PI covers the firm's services to clients; D&O covers management decisions.
Related cover
General information only, not advice on any particular policy. Cover depends on the policy wording and the insurer's terms.