Being a company director or officer comes with personal risk that many people don’t fully appreciate until a claim lands on their desk. Below, we’re answering some of the most common Directors and Officers (D&O) insurance questions, including what it covers, who needs it, and how it differs from other business cover.
Read on to learn more.
The personal risk behind every director’s decision
Directors and Officers insurance, often shortened to D&O insurance, protects the personal assets of company directors and officers if they’re held personally liable for actual or alleged wrongful acts in running the business. This can include claims relating to mismanagement, breach of duty, regulatory investigations, or decisions that lead to financial loss for the company, its shareholders, or third parties, including a wrongful act such as negligence, errors, or omissions. The insurance covers defence costs and other expenses tied to legal claims or legal actions against an insured person, including immediate financial backing to manage high legal fees.
Crucially, Directors and Officers insurance cover protects the individual, not the company itself, which is an important distinction from general business insurance. That protection applies under the law for covered allegations, but fraudulent or criminal actions are excluded.
Who needs D&O cover
D&O insurance isn’t just for large public companies. Directors and officers of private companies, non-profits, and charities can all be exposed to personal liability, and in some cases smaller organisations face proportionally greater risk, as they often have fewer resources to defend a claim. Depending on the policy wording, cover can also extend to past, present, and future appointees across the organisation. Anyone holding a director or senior officer role, including non-executive directors, should consider whether their personal exposure is adequately covered, and whether protection is arranged for the individual director as well as former directors, with run-off cover in some cases available for up to seven years after leaving a role. When we present cover options, this level of protection can also help attract and retain senior leadership, while companies without it may struggle to keep executive talent.
Legal costs, settlements and regulatory claims
A typical D&O insurance policy in Ireland can include different cover sections depending on the insurer, for example Side A, Side B, and Side C:
- Legal defence costs: covering the cost of defending a director or officer against a claim, even if the claim is ultimately unsuccessful.
- Damages and settlements: covering sums a director or officer becomes legally liable to pay as a result of a covered claim.
- Regulatory investigations: covering costs associated with responding to an investigation by regulators or statutory bodies, with such claims typically needing to be notified during the policy period.
- Employment practice claims: in some policies, covering claims relating to wrongful dismissal, discrimination, or harassment.
- Company reimbursement: covering the company where it has indemnified a director or officer for a covered loss.
Review the policy terms carefully, including how much cover your business needs, whether lower limits are suitable for SMEs, and whether an indemnity limit starting at £1 million is appropriate. Cover is commonly written for a 12-month policy period on a claims-made basis, and SMEs facing significant litigation costs should assess limits carefully.
D&O vs professional indemnity: exploring the two different risks
Yes. D&O insurance protects individuals for their decisions and conduct as directors or officers of a company, while professional indemnity insurance usually protects the entity against claims arising from professional advice or services provided to clients, and D&O is focused on directors and officers acting on the company’s behalf. Many companies need both, as they cover different types of exposure, and that distinction matters because a different failure or alleged act can trigger a different insurance response.
Why Irish directors trust BBi Ireland
At BBi Ireland, we arrange D&O insurance as officers’ insurance helping to protect directors, officers, and in some cases employees involved in management against potential risks across a wide range of businesses, from private companies to non-profits and charities. Our experience and dedicated knowledge help you understand exactly what you’re covered for with officers’ liability insurance, and where any gaps might be.
We work with a range of regulated insurers, giving you options and choices for an insurance solution tailored to your organisation’s size and management risk profile, whether through one insurer or a wider panel, subject to the cover needed and the client’s risk profile.
We pride ourselves on offering a range of options through experienced insurers approved by the Central Bank of Ireland, backed by our in house claims team when legal costs arise and an insured leadership team needs support most.
Protect your position
If you’re a director or officer looking to protect your personal position, get in touch with BBi Ireland to discuss your requirements and receive a free quote. We’re here to support you every step of the way, helping you find insurance cover that meets your business needs.
Contact us to learn more about how Directors and Officers insurance can help protect you and your business.
