7 reasons why you should buy Directors’ and Officers’ insurance

7 reasons why you should buy Directors’ and Officers’ insurance

20 July 2015

A common misconception is that Directors’ and Officers’ insurance is just for large corporations. Here we dispel that myth and give you ​7 reasons why you should buy Directors’ and Officers’ insurance


1. As a director, you could be personally liable to cover the cost if a claim is made against you for breaching your duties.  If you do not have the appropriate level of cover in place, you will have to personally fund the claim.  Can you really afford that level of insecurity, and would you be willing to risk everything you have worked for? In many instances, the cost of personally defending a claim made against you could run into the thousands, which you may not have readily available.

2. Based on the above – its not only the costs that can sting - some settlements can cost an eye-watering amount to settle, especially for claims such as unfair dismissal. In a society where the likelihood of having a claim made against you is increasing, it’s a good idea to have protection in place.

3. The risk is not only posed by employees. Shareholders could also claim against you if it turns out that your actions have caused share prices to fall. Creditors can also claim against you should they feel you did not act in their best interest. 

4. Large corporations aren’t the only ones at risk. SMEs also encounter many of the risks that larger corporations do, for example unfair dismissal. The only difference is that SMEs may not have access to an in-house legal or HR department who would follow the correct procedure and defend the claim. 

5. Clegg Gifford can arrange affordable Directors’ and Officers’ insurance, with cover starting from as little as £106 per year, which you can buy-online in minutes. Considering that if a claim is made against you, it could potentially run into the hundreds of thousands, it makes sense to invest in an insurance policy that will provide the cover should you require it, especially when it is so affordable and backed by a leading London market insurer. 

6. Attract talented Senior managers and Directors who will be encouraged to work for you knowing that you have the appropriate cover in place to protect them from any claims made against them.  Indeed some may not join without such protections in place.

7.  Some claims made against Directors and Officers are not covered by any other type of insurance, for example Professional Indemnity. For more information on how the policies differ, please see our post on the difference between Directors’ and Officers’ insurance and Professional Indemnity insurance. If a director has been personally named in a case, then they would require Directors’ and Officers’ insurance to cover the cost of the claim.