Directors And Officers Liability Insurance

Claims against directors and officers are nothing new, but in recent times, with changing attitudes and priorities, heightened pressure on the economy and so much uncertainty, businesses are finding themselves facing new and increased levels of risk.

With even the most minor legal claim having the potential to financially cripple a business, it has become imperative that directors and officers are held to the highest standards, and that related risks are suitably assessed and mitigated.

The cost of defending a directors and officers (D&O) claim has the potential to run into six figures, and on top of this there are government penalties and reputational damage to factor in. For this reason, it is vital that businesses take steps to first understand the latest risks that directors and officers face, and second to ensure adequate cover is in place to provide financial protection against claims.

What are today’s most common risks and liabilities that lead to D&O claims?

There is a variety of issues that have the potential to result in a D&O claim, with many of them having become more prevalent in recent times. The following are some of the most common risks and liabilities that business leaders need to be acutely aware of.


Insolvency claims tend to be one of the greatest sources of loss for businesses, as plaintiffs endeavour to recover losses from directors who have failed to act in the best interests of the company and its shareholders. Wrongful trading, misfeasance, fraudulent trading, overdrawn loan accounts and breach of duty are just some of the clams that can be brought against directors.

With widespread predictions that the economy will suffer considerably as a result of the pandemic, insolvency is likely to become more of an issue. Being aware of fiduciary duties is crucial to ensure that in time of financial difficulty, directors do not find themselves in a precarious position.

Cyber crime

Data breaches have the potential to result in serious losses for any business. Following a cyber-breach, directors and officers can face the blame for failing to ensure that adequate cybersecurity measures were implemented. For those seeking compensation, directors and officers often become targets.

The pandemic-fuelled remote working trend, which is showing little sign of abating even as restrictions ease, has brought with it increased cyber risks. This, combined with the general rise in importance of technology, has led to increased prevalence of cyber incidents. It is vital that organisations make cyber-security a priority, educating the workforce around the latest risks and putting measures in place to keep networks safe.

Workplace misconduct

Claims related to misconduct, harassment and bullying are likely to become more of a liability for employers, as younger members of staff have a tendency to take these issues more seriously than older colleagues, and are generally less willing to put  up with workplace harassment or bullying.

When employees become victims of improper workplace conduct, directors and officers can potentially face prosecution for failing to provide a safe working environment for their staff.

Environmental issues

Concern over climate change and other environmental issues has exacerbated over recent years. As such, directors and officers are being held to account to a greater extreme in relation to decisions made over the likes of sustainability.

Companies and their leading officers may find themselves at risk of claims if they are suspected of contributing to environmental damage, or causing an environmentally harmful incident. It is therefore vital for organisations to ensure they are compliant with current regulations, and to implement and maintain a formal environmental, social and corporate governance policy.

Lack of diversity

It is not uncommon for organisations to become the subject of legal action following accusations of failing to do enough to promote diversity in the workplace.

Equal opportunities activists have become increasingly vocal in recent times, with race, gender, religious belief and orientation all factoring on their radars.

UK employers with more than 250 employees are now required to comply with gender pay gap reporting legislation, something which has created yet another liability for directors and officers who do not actively attempt to address inequalities.

Directors and Officers Cover from Robert Gerrard

Here at Robert Gerrard, we have over our several decades of experience in commercial insurance built up a comprehensive understanding of the typical risks and issues faced by directors and officers industry-wide.

If you are seeking to protect your organisation from the prevailing directors’ and officers’ risks that have the potential to wreak financially devastating consequences, you are welcome to talk to our team.

We’ll assess your specific liabilities, and then tailor a package that takes care of them. Directors and Officers liability cover provides protection for an organisation and the personal wealth of its leaders against damages and out of court settlements, as well as covering the legal expenses involved in defending civil and criminal proceedings.