Navigating Directors & Officers Insurance for UK Scaleups

The short version

If your company is sued, that’s the company's problem. If you are sued as a director, it is your problem. And your money.

Directors & Officers (D&O) insurance is the policy that stands between a claim against you personally and your own savings, house and pension. For a startup or scaleup, the moment it matters most is usually a fundraise, a redundancy round, or a downturn.

All three are very common scenarios in a growing business. So the risk is genuine.

What a claim looks like

D&O is easy to dismiss as a big-company product, but the claims tell a different story. In the UK, the ones that hit growing businesses are ordinary events, not scandals or heists:

• Employment disputes. An unfair dismissal or discrimination claim can name a director personally, not just the company. Redundancy rounds during a cash crunch are a frequent trigger.
• Wrongful trading. If a company keeps trading when there was no reasonable prospect of avoiding insolvent liquidation, directors can be held personally liable under the Insolvency Act 1986. When a company fails, liquidators and creditors look closely at what the board knew and when.
• Investor and shareholder claims. During and after a raise, investors scrutinise the numbers. If actual performance diverges from what was presented, misrepresentation and breach of duty claims follow.
• Regulatory investigations. HMRC, the FCA, the HSE and the ICO can all investigate directors directly, over tax, data protection, health and safety, or governance failures. Defence costs mount before any finding is made.

The common thread is defence cost. Even a claim you win can run to tens of thousands in legal fees. D&O covers that defence, which is the part most directors underestimate.

Why it becomes non-negotiable when you raise

REALLY HONEST will continue to bang this drum every chance we get.

VCs and angels often require D&O as a condition of investment, and they are right to. A funding round concentrates risk: more scrutiny, higher expectations, and a paper trail of forecasts and representations that can later be tested. Put simply, the round is the moment your personal exposure rises.

Buy the cover before the round closes, not during it. Adding it to the data room signals you have thought about governance, which is a small point in your favour with investors.

You can read more about the impact of fundraising on insurance here.

What D&O does not cover

We would rather tell you this now than at claim stage.

D&O does not cover fraud or dishonesty once proven, deliberate illegal acts, or claims arising from circumstances you already knew about and did not disclose.

It is protection for honest mistakes and contested allegations, not a shield for bad faith. Anyone who tells you it covers everything is selling, not advising.

The main components of D&O insurance policies typically include:

• Coverage for Legal Costs: This includes defense expenses for lawsuits against directors and officers.
• Indemnification Protection: This compensates directors and officers for losses due to legal actions.
• Protection against Breach of Duty Claims: Covers allegations of wrongful acts in managerial duties.
• Coverage for Regulatory Actions: Protection against regulatory inquiries and penalties.
• Personal Asset Protection: Safeguards the personal assets of directors and officers in legal disputes.
• Settlements and Damages Coverage: Addresses financial settlements and damages arising from lawsuits.

Directors & Officers insurance is an essential safeguard for UK startup and scaleup businesses, providing vital protection to your senior team's personal financial risks arising from legal challenges.

Who actually buys D&O, and when?

D&O can feel like a cover for "proper" companies with big Boards. Our own book says otherwise.

Just over half the businesses we insure hold D&O (52%). More telling is when it appears. Among our clients turning over under £250k it's already on 48%; by the time a business passes £1m, that jumps to 64%.

It tracks growth, not size for its own sake: more people, bigger contracts, outside investors and a real board all raise the odds of a claim against a director personally.

US exposure is also a very strong indicator of a need for D&O. 68% of our clients with US operations or customers hold D&O, against 49% of those without. American investors and regulators are quicker to name directors individually, and they expect the cover to be there. “The Yanks love to sue”, as my old Gran used to say.

It’s also worth nothing that 93% of our clients who hold D&O also hold Corporate Legal Liability, because the two are usually bought together as a management liability package. If a broker is quoting you D&O in isolation, it's worth asking why.

Taken from a sample of 600 customers, as of August 2026. Numbers refer to the % of our customers that hold the name cover with REALLY HONEST.

Ensure the future stability and safety of your leadership team by choosing the right D&O insurance policy today.