Management liability insurance
Protects the personal liability of company directors (also known as directors and officers insurance) for any mistakes or omissions they might make while in the role.
Why directors and officers insurance?
Your personal liability
Many directors don't realise but if anything goes wrong on your watch, you could be held personally liable for the fallout.
That means legal action, fines, disqualification, or even a prison sentence.
Directors and officers cover – sometimes called management liability or D&O – is designed for this purpose, covering any defence costs and awards made against you.
Responsibility = risk
Power comes with responsibility - to employees, investors, regulators and members of the public.
Personal liability claims can cover a whole range of issues, from breaching health and safety laws, to misadministration of the company pension, or errors in financial reporting.
Even if you always act with the utmost care, it makes sense to cover your back.
PI won't cover you
It's a common misconception that personal liability claims would be covered under a professional indemnity (PI) or general liability policy.
But this is unlikely to be the case. A separate D&O is the only way to guarantee personal protection for those with management responsibility in your business.
We're the British Insurance Awards 2018 Insurance Start-up Winner - recognised for our innovative range of covers, online customer experience and flexible subscription model, which make buying and managing insurance easy and accessible for businesses in the digital industries.
Directors and officers insurance guide
What is directors and officers insurance cover?
First class travel, power meetings, hobnobbing with clients – there are perks to being a director. But it can also be a tough gig. Employees, customers, shareholders, regulators – they all rely on you. They put their trust in you to act responsibly.
Of course you do the utmost to carry out your role with care and attention. But, if something does go wrong on your watch, being a director means you could face a claim for personal liability.
This is where directors and officers insurance (management liability or sometimes it's called D&O for short) – can help. It covers your personal liability for any mistakes or omissions while a company director, including any defence costs and awards made against you.
Who is directors and officers insurance for?
If your directors have legal or regulatory responsibilities to employees, the public, regulators, investors or other directors, then you should consider D&O.
It is particularly important for directors of publicly listed companies and those seeking investment. Investors often ask for this insurance so getting it sorted early shows you take your responsibilities seriously.
What are the risks of not having directors and officers insurance?
Claims can cover numerous issues, whether breaching health and safety laws, misadministration of the company pension or errors in financial reporting – particularly where the individual has acted outside the authority of the company.
Even if you've done nothing wrong, the impact of a claim like this can be catastrophic. You'll be personally liable for any fines, compensation and defence costs, not to mention any criminal investigations. So it makes sense to cover your back with directors and officers insurance.
Things you can do
A personal liability claim isn't something anybody wants to face. Which means avoiding a claim in the first place is your best defence.
As a director, take time to understand all the laws and regulations that affect you and your business, making sure you're on top of everything. And if you don't personally have the time or expertise to do this, then consult specialist advice – it will be worth it in the long-run.
What to watch out for
It's important to remember that directors and officers insurance only covers individual directors and officers, not the business itself. You may also need public liability insurance and professional indemnity insurance to protect the company as a whole.
Also bear in mind that the legal term 'officer' is broad, with the potential to cover numerous individuals in management or supervisory positions. So have a think about who else may be at risk of a potential claim and have them covered too.
- Ultimate Guide to Fintech & Startup Insurance
- How much cover do I need?
- Can I change my cover or add policies?
- What to do if I have multiple business activities?
- How do I know what my policy covers?
- How do I cancel my policy?
- How long is a quote valid for?
- Is business insurance tax deductible?
- What do I do if my business type isn't on the list?
- Will I be covered straight away?
Other covers to consider
Covers your liability to customers for professional mistakes, errors or omissions in services you provide.
Covers your liability to employees for bodily injury or work-related sickness.
Covers your liability for failing to protect data, as well as penalties for not complying with data protection law.
Contents and equipment
Protects your property against theft, loss or damage.
Covers your liability to members of the public for bodily injury or damage to their property.
Commercial legal protection
Covers compensation awards, professional fees and legal costs associated with a range of legal disputes.
Directors and officers insurance FAQs
Many directors don’t realise but if anything goes wrong on your watch, you could be held personally liable for the fallout. That means legal action, fines, disqualification, or even a prison sentence. Directors and officers cover – sometimes called management liability or D&O – is designed for this purpose, covering any defence costs and awards made against you.
This insurance is not a legal requirement, but it can help to think of it be described as professional indemnity cover for people in managerial positions. It’s a common misconception that personal liability claims would be covered under a professional indemnity (PI) or general liability policy. But this is unlikely to be the case. A separate D&O policy is the only way to guarantee personal protection for those with management responsibility in your business.
A directors & officers policy covers you personally against any professional mistakes that you personally make. Personal liability claims can cover a whole range of issues, from breaching health and safety laws, to misadministration of the company pension, or errors in financial reporting.
It does not however cover anyone else in your business from claims against them (you need professional indemnity insurance for these claims). Nor does it protect your business from claims regarding an injury caused on your premises to your employees (employers liability insurance) or members of the public (public liability insurance).
Directors and officers insurance is not only suitable for company directors, but also for all people in supervisory positions, effectively anybody who has legal or regulatory responsibilities to employees, the public, regulators, investors or other directors. It’s especially important for people in charge of publicly listed companies and those looking for funding, as most investors will look favourably upon founders who take their responsibilities, and the risks they face, seriously.
No matter how many companies you’re involved in, you’ll be covered for your activities within all of them, as long as you provide this information at the moment of taking out your policy. And if your responsibilities increase at a later date this is easy to change with our pay-by-the-month subscription. Just give us a call and we can update your policy and advise you on any changes to the cost.
It doesn’t matter how big or small a share you hold in a company. If you have management responsibilities, particularly if they’re of a legal or regulatory nature, then you should consider D&O.
Selling your shares in a company may or may not affect the level of D&O cover you need. However, whenever your role or position changes,you should always let us know to ensure your policy is up-to-date.
Both the level and the cost of D&O cover that you need will depend on several factors, such as your company’s (or companies’) activities, its financial stability, how long it’s been operating as well as where it is located. You can find out for sure by getting in touch with us and talking over the details.
At Digital Risks, we don’t like to put constraints on anyone, especially our customers. All of our policies are sold as flexible pay-monthly subscriptions, helping you to manage your cash flow, and giving you the freedom to change or cancel your cover at any time.
Invoices for your monthly payments are available on request, so all you need to do is give us a call (or drop us a line), and we’ll get the requested documents sent out to you as quickly as possible. Alternatively, we can set up your account so that you automatically receive these on a monthly basis.
Our monthly subscription model gives you ultimate flexibility, with the option to cancel or change your cover at any time. We know that small businesses can grow and change quite frequently, which is why we’ve made it incredibly easy to amend your policy. Just get in touch with us by phone, email or webchat in the bottom right corner of this page.
Same goes for making a claim.We won’t burden you with loads of unnecessary process and paperwork. All you need to do is let us know what happened and we’ll sort everything out for you as soon as possible.
When you’re in charge, you have to make difficult decisions on a daily basis, frequently under intense pressure. While you’ll no doubt do your utmost to ensure you’re acting in the best interests of the company, and its employees and stakeholders, at all times, occasionally you might make the wrong move - or others might claim you have. If that happens, you could personally face legal claims, fines, disqualification, or even a prison sentence.
You have to be really careful about what you say and how you behave at work, particularly when you’re the one in charge. Sometimes, things slip out that you don’t mean, or in the heat of the moment, and you could find yourself with discrimination or harassment claims to deal with. If that happens, D&O will help you defend yourself, covering any legal or settlement costs that might result.
As a company director, chances are you handle a lot of business relationships personally, especially if you’re a small business. However if you decide to move on to a different company and take your contacts with you, your previous employer could take you to court. In this situation, your legal costs and any resulting compensation will be picked up by your D&O policy.
Staying up-to-date with ever-changing rules and regulations isn’t easy, but it’s vital if you want to stay on the right side of the law. In many cases, any regulatory issues or claims would fall on the company as a whole, however if you personally are found at fault, an individual claim could be made against you for malpractice. And once again, D&O would have your back. Though it might be your mishap, you can rely on this cover to have your back.
As D&O is specifically designed for people in charge, you’ll also need to take out policies that protect your business as a whole. For example, you’re legally required to take out employers liability insurance, which protects you against any claims of accident, illness of injury from employees. And with Digital Risks, EL comes as a package deal with both Public and Product Liability cover, which will protect you from claims of accident or injury from members of the public, as a result of your activities or products.
Another important cover to consider is professional indemnity insurance, which protects your business in the event of a claim for professional oversight or malpractice. It’s like D&O but for your company as a whole.
Angel investors vs venture capital
Discover the main differences between two of the most common sources of startup funding and the best ways to choose the right path for your business.
Business risk management
Risk is a necessary part of any endeavour, and it is impossible to run a risk-free business. You can, however, reduce the risk of risk.
Excellent value at an affordable monthly cost. I have not needed use the services. But its good to know I have the insurance there to allow me to get on with my work.
James, J. Black Photography
Flexible. simple, easy, immediate. As a busy freelancer I need flexibility to potentially change the policy month by month - very handy and a feature I didn't find with other providers.
Tim, Graphic Design Freelancer
Excellent service, and really lovely people. Completely understanding of small or start up businesses, and a willingness/ability to be flexible. I'm very happy.
Lorna, Magic Penny Gifts
A super slick interface and all around great experience. Thumbs up Digital Risks! Having spoken to a number of "large" insurers, the pricing I received from Digital Risks was much more competitively priced for "like for like" cover. Highly recommended.
Authorised by the FCA
The FCA supervises UK financial services firms to protect consumers. We are directly authorised and regulated by the FCA and our Firm Reference Number is 656459. These details can be confirmed on the Financial Services Register at www.fca.org.uk or by calling the FCA on 0845 606 1234.
A-rated financial strength
Our insurance products are underwritten by Standard & Poor’s A-rated financial strength or higher. This means the underwriter has been independently assessed by the world’s leading credit rating provider and found to have a strong capacity to meet financial commitments (pay claims).
Protected by the FSCS
If you are a business with an annual turnover under £1m, charity with an annual income under £1m, or trust with net assets under £1m, then you will be entitled to compensation from the FSCS in the unlikely event we cannot meet our obligations. Full details and further information on the scheme are available at www.fscs.org.uk