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6 things you didn’t know about D&O Insurance

The world is an increasingly litigious place. Both individuals and businesses face an increased risk of legal action for a range of alleged wrongful acts, which could leave you significantly out of pocket. 

It’s little wonder, therefore, that Directors’ & Officers’ Insurance (also known as D&O Insurance) is an increasingly sought-after policy for both corporate and nonprofit organisations alike.

But what is Directors’ & Officers’ Insurance? Here are 6 facts that you may not know about this important insurance cover.

1. D&O Insurance protects individuals

Directors’ & Officers’ Liability Insurance provides protection to your individual directors, managers and officers. This is the key difference between Professional Indemnity and Directors’ & Officers’ Insurance. The former financially protects you against claims made against your business, whereas the latter covers claims against specific business leaders.

D&O Insurance therefore covers the cost of the individual’s legal expenses and damages. This means that their personal assets, such as their homes, won’t be at risk if a claim of wrongdoing is made against them personally.

2. D&O Liability Insurance provides protection for former directors

That’s right. Not only does D&O Insurance protect current managers, directors, non-executive directors (NEDs) and officers, but it also protects individuals who have left the organisation. So, if a claim is brought against a former director in the future, providing the incident occurred when the cover was in force, the policy will cover the cost of legal expenses and potential compensation.

3. You can get Directors’ & Officers’ Insurance for non-profit organisations

Just because your organisation isn’t run for profit doesn’t mean you’re less likely to face legal challenges. 

In the modern world, even not-for-profit organisations face risks of legal action from employees, volunteers, supporters and even regulatory bodies, such as the Health & Safety Executive. Thankfully, Directors’ & Officers’ Insurance for non-profits covers individuals in senior positions. Whether they’re a board member, trustee, director or manager, this cover can give them peace of mind. 

4. SMEs can also benefit from D&O Insurance

Large corporations aren’t the only ones who could benefit from the additional financial protection of Directors’ & Officers’ Insurance. 

Sole traders should get adequate protection from their Professional Indemnity policy because claims made against them will be considered as being against the business as a whole. However, if you’re an SME with employees, your directors could come up against a claim made against them as individuals. As a result, personal assets could be at risk.

An SME is also less likely to have the support of a legal department and HR team, which means you will need to pay for outside professional help. This can all add to the cost of a wrongdoing claim.

5. D&O Liability Insurance is a tax-deductible expense

D&O Liability Insurance offers personal protection. However, paying for your premium (plus Insurance Premium Tax) can be put down as a business expense. This is because the policy covers your business activities. 

The cost of the policy and Insurance Premium Tax will subsequently reduce your profit and therefore the amount of tax you pay. 

6. You can get international cover

If your organisation operates overseas, you can extend your Directors’ & Officers’ Insurance policy to protect your teams in those countries. In some instances, your insurer can arrange D&O Insurance extensions for international markets. 

However, there are some exclusions. For instance, in Russia and China, you must have a policy taken out in that market for it to be valid. Your broker can advise on the best course of action for your chosen markets. 

Arrange your D&O Insurance today

If you’d like to know more about D&O Insurance and the benefits for your organisation, get in touch with Associate Director Mark Ling today. You can contact him on 01223 949002 or by emailing

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