D&O insurance: your personal assets, safe from the decisions you take for the company
Directors, board members and executives are personally liable, with their own assets, for many claims arising from their management. Directors' and officers' liability insurance pays for their defence and any damages, so that a claim against the company does not end up at their front door.
Insurance for the people who run the company
D&O insurance (Directors and Officers) covers the personal liability of those who manage and run a company against claims for errors, omissions or breaches of duty committed in the course of their role.
Under the Spanish Companies Act, directors are liable to the company, its shareholders and its creditors for damage caused by acts contrary to the law or the articles of association, or carried out without due diligence. On top of that, there are other routes: tax and social security debts passed on to directors, liability in insolvency proceedings and investigations by regulators.
The policy is taken out in the company's name but protects the individuals. And it is not just for large corporations: in an SME, directors are often even more exposed, because management and ownership are so close.
In a nutshell
If a claim is brought against you personally for a decision taken as a director or officer, the policy pays for your legal defence and, where applicable, the damages, so you do not have to pay with your own assets.
Everyone who takes decisions on behalf of the company
The definition of insured person is one of the points that varies most between policies. These are the roles it should normally include.
Directors and board members
Sole, joint and several directors, board members and independent directors.
Officers
Senior management and employees with management or supervisory duties, even if they are not listed in the Companies Register.
De facto directors
People who, without a formal position, act in practice as directors of the company.
Past and future
People who have already left office and those who join during the policy period, as well as spouses and heirs for claims brought against them.
Defence, damages and the costs that come with a claim
Legal defence
Fees of lawyers, court representatives and experts, and court costs in civil, criminal, administrative or employment proceedings, from the first demand.
Damages
The amounts the insured has to pay under a judgment or a settlement approved by the insurer.
Bail and bonds
Civil bonds and, depending on the policy, criminal bail costs, to avoid precautionary measures against your assets.
Investigations
Costs of assistance when a regulator or public body opens an investigation or inspection affecting the officers.
Reputation
Costs of communications consultants to limit damage to your personal image after a claim.
Company reimbursement
When the company pays its officers' defence costs upfront, the policy reimburses it, if this cover has been taken out.
Cover, limits and sub-limits depend on each policy and insurer. We set out in writing what each proposal includes before you buy.
Real situations in which an officer is liable with their own assets
Creditors and insolvency
If the company becomes insolvent and the insolvency is deemed culpable, directors may be ordered to cover the shortfall. They can also be liable for company debts if they failed to wind it up when required.
Tax and Social Security
The authorities may, in certain cases, pass on the company's tax and social security debts to its directors.
Shareholders and investors
Minority shareholders, funds or buyers of the company who believe a management decision has harmed their investment.
Employees
Employment practices claims, such as dismissals, discrimination or harassment, also brought against the officers.
Regulators
Proceedings by bodies such as the CNMV, the CNMC or the Spanish Data Protection Agency.
Customers and competitors
Third-party claims alleging that management took negligent or anti-competitive decisions.
Two D&O policies with the same limit can protect very different things
Before recommending a policy, we compare the market and review, clause by clause, the points that decide whether a claim will be covered.
- Retroactive cover. It should cover acts before the policy started, not just future ones.
- Discovery period. Time to report claims that arrive after the policy is cancelled or the company is sold.
- Definition of insured. It should include everyone who needs to be protected.
- Limit and sub-limits. Sufficient for your size, with no sub-limits that hollow out key cover.
- Exclusions. Particular attention to those relating to insolvency, tax and claims between insureds.
- Defence from day one. Defence costs advanced while coverage is being discussed.
We stand by you with the legal backing of Trebia Abogados
A D&O claim usually starts with a formal demand, a lawsuit or an administrative notice. Our claims department, supported by the Group's Legal Department, notifies the insurer in time, coordinates the defence and makes sure the policy responds as agreed.
What clients usually ask us about D&O insurance
Does an SME need D&O insurance?
Yes. Directors' liability does not depend on the size of the company, and in SMEs claims from creditors, the tax authorities or Social Security are particularly common. What's more, the cost of the insurance for an SME is usually moderate.
Does it protect my personal assets?
That is precisely its purpose: the insurer pays the defence and covered damages, so the director does not have to pay them from their personal assets.
Does it cover directors who have already left?
Good policies cover past, present and future directors and officers. It is one of the points we review, together with retroactive cover.
What happens if the claim arrives after the policy is cancelled?
D&O covers claims made during the policy period. For those that arrive later there is the discovery period, whose length and cost should be negotiated from the outset, especially ahead of a sale or closure of the company.
Does it cover fines and penalties?
As a rule, fines and penalties that cannot legally be insured are not covered, but the defence in the disciplinary proceedings is. Acts declared to be wilful or fraudulent are also excluded.
How much does it cost?
It depends on turnover, sector, financial position, the limit chosen and the claims history. We prepare a free review with several comparative proposals.
We will prepare a free D&O review for you
Tell us who you are and one of our specialists will contact you to learn about your company and present comparative proposals from the market.
- Comparison across more than 40 insurers
- A review of your current policy, if you have one
- A single point of contact who also supports you with claims
Request your review
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