Written by: Griffiths & Armour on: 25 May 2023

Directors' and Officers' Insurance

Why should Private Companies purchase Directors’ and Officers’ insurance?

Directors’ and Officers’ (D&O) insurance is a type of liability insurance that provides financial protection in the event that directors and management are sued for wrongful acts committed in the course of their duties.

D&O protects the personal assets of directors, officers, plus their spouses and estates. It is especially important for private companies, as the directors and officers tend to have a greater level of involvement in the day-to-day operations of the company, and are at a higher risk of potential claims brought against them.

Private companies see a range of benefits from having D&O coverage, including:

  1. The confidence the coverage provides may help to attract new directors to the board.
  2. If the company is looking for venture capital, many firms will require D&O before they will invest.
  3. When a company is declared insolvent, D&O insurance often stands between creditors or bankruptcy trustees and the personal assets of directors and officers.
  4. Shareholder lawsuits – unfair prejudice claims are common amongst private companies.
  5. Regulatory exposures. Defending against Government enforcement action could be expensive, D&O may cover these costs depending on the situation.
  6. Having D&O insurance as a private company will help protect you through the transition to becoming a public company. It allows you to establish a relationship with an insurer before a potential initial public offering (IPO).
  7. For any merger or acquisition activity, whether as a buyer or seller, D&O is crucial to protect decision makers for the representations made in negotiations.

To find out more about how Directors’ and Officers’ insurance can protect your firm, Griffiths & Armour Client Services Director, Martin Hawken, discusses the key reasons to consider a D&O insurance policy in the video below.

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  • 00:00:00 - FREQUENTLY ASKED QUESTIONS ABOUT DIRECTORS‘ AND OFFICERS’ INSURANCE
  • 00:00:29 - WHO DOES DIRECTORS‘ AND OFFICERS’ INSURANCE PROTECT?
  • 00:01:10 - WHY DOES A COMPANY OR ITS DECISION MAKERS NEED OR WANT D&O INSURANCE?
  • 00:01:43 - WHERE DO D&O CLAIMS ORIGINATE FROM?
  • 00:01:56 - APART FROM CLAIMS, ARE THERE OTHER REASONS WHY PRIVATE COMPANIES PURCHASE D&O?
  • 00:03:03 - WHAT ISN’T COVERED WITH D&O?
  • 00:03:35 - WHAT DOES D&O INSURANCE COST?
  • 00:03:54 - WHAT COVERAGES CAN BE PURCHASED ALONGSIDE D&O?

If you are Private Company seeking guidance on purchasing D&O insurance, please click below to submit your enquiry or book a consultation with one of our specialist insurance brokers, who will be able to discuss your requirements.

Martin Hawken Contact