The Institute of Directors doesn't just write about D&O insurance, it actively arranges cover for its own members through Hiscox. That's a useful signal for anyone trying to work out what a proper director's insurance policy should actually include.
If you're a director of a UK company, you can be held personally liable for decisions made in that role, and your liability isn't capped at what you invested in the business. It extends to your personal assets, including your home and savings, if a claim against you succeeds. Directors and Officers insurance, usually shortened to D&O, exists specifically to protect you from that exposure.
The Institute of Directors (IoD), the UK's oldest and most established body representing company directors, takes this seriously enough that it runs its own introduced D&O scheme for members through Hiscox, with a discount for the lifetime of the policy. When a body whose entire purpose is representing directors' interests puts its name behind a specific type of cover, it's worth understanding exactly what that cover does and doesn't include.
What the IoD's own guidance says: D&O insurance "can help protect company leaders, should they be accused of wrongful acts while they are serving, and acting, in their capacity as a director or officer of the company." It covers both the cost of defending a claim and any losses that result from it.
This is the single most common confusion we see. Professional Indemnity (PI) protects the business against claims that its advice or service was negligent. D&O protects the individual director personally, against claims that they mismanaged the company itself. The IoD's own factsheet uses a clear example: if a consultant in your business gives advice that causes a client a financial loss, that's a PI claim. If the board is then sued for the decision to hire that consultant in the first place, that's a D&O claim.
Many established businesses need both, and it's worth checking your existing cover doesn't quietly assume one policy does the job of two.
It's not just shareholders. A claim against a director can come from:
Insolvency scenarios are worth flagging specifically. Directors of companies in financial difficulty face particular scrutiny over whether they continued trading responsibly, and insolvency practitioners will often examine board decisions closely after the fact.
D&O insurance isn't a legal requirement in the UK. But many investors, lenders, and even prospective non-executive directors treat it as a precondition before they'll fund a business, approve a contract, or agree to join a board. If your business is raising investment, taking on debt finance, or trying to recruit experienced non-executives, having D&O in place, or at least having a clear answer about your cover, can genuinely affect those conversations.
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See My Cover Options →This article references publicly available guidance from the Institute of Directors for context. CoverMatch is not affiliated with, and this article is not endorsed by, the Institute of Directors. Always check current terms directly with a broker or the IoD before making a decision.