Directors’ and Officers’ Insurance in the UK

Abstract

This paper examines the significance of the directors’ and officers’ (D&O) insurance policies in the UK. It argues that the significance of D&O policies lies in D&O policies being commercial than legal tools for directors. When third parties sue a director, unless the director assumes personal responsibility (where this assumption is an element of the civil wrong), English law does not impose personal liability against the director, and a D&O policy, as a legal tool, may not respond. Moreover, as a legal tool, it may not be necessary, as defence costs can be provided to directors under company indemnity. As commercial tools, D&O policies provide directors with defence and investigation costs, and in criminal cases defence costs until the final judgment or admission of dishonest conduct. Moreover, as a commercial tool, unlike under company indemnity where directors would repay defence costs if unsuccessful, defence costs will usually be covered off by a D&O policy in the event of a negative judgment.