D&O Insurance

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What is Directors & Officers (D&O) Insurance?

Directors & Officers Insurance is an insurance policy to protect the directors and other officers of a company from legal actions initiated against them for their actions and decisions.

Shareholders and third parties can sue the board members, managers, and employees of the company for misconduct and wrongdoing. D&O Insurance will cover the legal expenses, damages, awards, and settlements arising from such claims. The policy also offers protection to the company if it is sued.

directors in office

What are the Most Common Risk Scenarios for Directors & Officers?

A list of the common risk scenarios for directors & officers is given below:

Breach of fiduciary duty & responsibility towards the company and its shareholders

Actions by shareholders

Non-compliance with laws & regulations

Corporate governance requirements

Misrepresentation in a prospectus

Incomplete or inaccurate disclosures

Reporting errors

Regulatory actions & investigations

Accounting irregularities

Shareholder or investor claims

M&A litigations

Corporate manslaughter

Competitor claims

Creditor claims

Employment practices & HR issues

Data breaches and cyber losses

Public companies typically face securities lawsuits from regulators and shareholders. But employment practice lawsuits are common for private companies.

Who Needs D&O Insurance Coverage?

Directors' and officers' liability insurance is essential for every organization, irrespective of its size. The following types of companies in the UAE will specifically benefit from a D&O policy.

Public companies (of all sizes)

Medium-sized private companies

Non-Profit Organizations

Financial institutions such as private equity firms, venture capital firms, and investment advisors

Companies planning for IPOs

Companies seeking to raise funds through various channels like equity, debt, VC, etc

Companies active in the mergers and acquisitions (M&A) space

Distressed companies and companies recovering from bankruptcy

Companies affected by economic cycles

Startups and high-growth companies

Infotech, biotech, and healthcare companies

What is Covered Under D&O Insurance ?

Directors & Officers Insurance UAE covers the following:

What is not covered under D&O Insurance?

Some of the major exclusions of D&O Insurance are as follows:

Who Can Claim D&O Insurance?

Claims under a D&O Insurance policy can be made by the following entities:

The company and its employees

State authorities and regulatory bodies

Shareholders and investors

Lenders and creditors




Other stakeholders

Why Do Corporate Companies Need D&O Insurance?

D&O Insurance offers protection against alleged wrongdoing by the company’s directors and officers. There are other important reasons for companies to buy Directors and Officers insurance.

To protect the company’s financial stability and strengthen the balance sheet

To attract and retain top managerial talent for the company’s growth

Company’s exposure to stakeholder claims

To meet the financing requirements before approaching the lenders & creditors for funds

Compliance and regulatory requirements

Corporate governance requirements

Planning for IPOs and M&A activities

Frequently Asked Questions on Directors and Officers Insurance

D&O Insurance protects your company, directors, and officers if they are sued for any wrongdoing or misconduct. The policy covers (i) legal expenses and (ii) any damages, awards, and settlements arising from legal claims.

Yes, it is a good practice for every company to get D&O coverage. Small businesses generally lack financial resources. So they are highly vulnerable to lawsuits filed by their customers and suppliers. D and O insurance offers financial stability in such circumstances.

The cost of directors’ and officers’ insurance is not fixed and depends on various factors like

(i) company size,

(ii) nature of business,

(iii) financial position,

(iv) insurance coverage, and

(v) claims history of the business.

Professional liability insurance protects individuals and businesses that provide professional services, like doctors, accountants, consulting companies, etc. But directors’ and officers’ liability insurance protects the company, its directors, managers, and officers from legal claims made by the stakeholders.