Directors & Officers Insurance, matched properly
Directors and officers liability insurance explained: Sides A to C, directors’ duties, what a company can’t indemnify, published costs, and one licensed or authorised broker to arrange it.
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Step 1 of 3What is D&O Insurance?
Directors and officers liability insurance (D&O, sometimes called directors insurance) generally covers directors and officers for claims about decisions they made running an organisation, including the cost of defending them and of responding to investigations. Policies call the conduct behind these claims “wrongful acts”: a breach of duty, neglect, an error, a misleading statement or an omission. Smaller companies often buy D&O as part of a management liability package.
Who commonly considers it.
- Public & Private Companies Board members, CEOs, and senior executives
- Non-Profit Organisations Volunteer directors and committee members
- Startups & Scaleups Founders managing rapid growth and investment rounds
- Professional Associations Executive officers of industry bodies
What D&O insurance covers for directors and the company.
D&O policies are usually built in three parts, called sides. Based on two insurers’ wordings, they generally cover these.
- Side A: directors personally A director’s or officer’s loss when the company hasn’t indemnified them, for example because it can’t9, 10.
- Side B: the company’s reimbursement Reimburses the company when it has indemnified its directors and officers9, 10.
- Side C: the company itself The company’s own liability for securities claims, which the AICD says is typically bought by listed companies7.
- Investigations Legal costs of responding to a formal investigation. One wording excludes routine supervision and industry-wide reviews9, 10.
- Defence costs Paid as they’re incurred, before the outcome, and repayable if cover is later denied9, 10.
- Run-off for retired directors Both wordings we reviewed give retired directors 84 months to report claims about their time on the board if the policy isn’t renewed9, 10. See claims-made vs occurrence.
D&O and management liability insurance.
Smaller companies often buy D&O as part of a management liability package.
- What it adds Company reimbursement and entity cover, employment practices, crime and tax audit costs, and an extension for statutory fines and penalties11, 16.
- Shared limits Some sections have lower sub-limits than the main limit13.
- Who buys which One insurer’s online quoting tool for brokers covers management liability for businesses with turnover up to $50 million, and it aims its standalone D&O at unlisted public companies over $50 million and private companies over $150 million27.
Directors’ duties and the law.
Directors’ duties apply to every director, including directors of small companies and sole directors.
- The duties Care and diligence, good faith in the company’s best interests, and not misusing your position or company information. Reckless or dishonest breaches can be criminal offences1, 6.
- Penalties An individual’s civil penalty can be up to 5,000 penalty units or three times the benefit gained, whichever is greater2.
- What a company can’t indemnify Liabilities to the company itself, pecuniary penalty and compensation orders, and liabilities to others that didn’t arise in good faith. Costs of responding to an ASIC or liquidator investigation before proceedings start can be indemnified1.
- What a company can’t insure A company can’t pay a premium for cover against a wilful breach of duty to the company, or improper use of position or information. Insurance that breaches this is void to that extent1.
- Charities Board members of registered charities have duties under the ACNC’s Governance Standard 5, including managing finances responsibly and not trading while insolvent. For charities that are companies, Standard 5 replaces most Corporations Act duties4.
- Director ID Every director needs one before they’re appointed. It’s free, and you keep it for life2, 5.
Director penalty notices.
Directors can be personally liable for some of their company’s tax debts.
- What’s covered by the regime Unpaid PAYG withholding, GST and superannuation guarantee charge. The ATO can recover the amount from a director 21 days after issuing a notice3.
- New directors Have 30 days to deal with existing debts3.
- Resigning Doesn’t remove liability for earlier periods3.
- Insurance The three wordings we reviewed cover unpaid company taxes only where the company is insolvent, usually with a lower limit. One management liability wording excludes unpaid super9–11.
How much does D&O insurance cost?
We couldn’t find D&O premiums for small companies published by a regulator or insurer. These are the figures we found: indicative ranges from one broker, and market data.
BizCover customers’ average, July 2024 to June 2025.16
By APRA-regulated insurers in 2025–26, down 8.8%. APRA.20
Financial and professional lines in Marsh’s Pacific region, Q2 2026. Marsh.17
Average rate per million for Aon’s ASX300 clients in 2025. Aon.19
Indicative premium ranges a year, from upcover12:
upcover puts listed small companies, including Side C cover, at $20,000 to over $100,000 a year12.
What affects the price.
What insurers and brokers commonly look at.
In Victoria, duty on D&O premiums is 7% for policies taken out or renewed from 1 July 2026, falling by 1% a year until it’s abolished on 1 July 203321.
Common exclusions.
Every policy lists its exclusions. These are common examples from three published wordings.
- Fraud and wilful breachExcluded once proven or admitted. Defence costs are generally paid until then9–11.
- Known mattersFacts known before the policy, earlier notified claims, and existing or earlier litigation9–11.
- Major shareholdersOne wording excludes claims by holders of 25% or more, or with a board seat. The AICD says 15% is common7, 11.
- Fines and penaltiesOnly those insurable by law are covered, usually with a lower limit9, 10.
- Injury and damageBodily injury and property damage, although some policies cover defence costs for work health and safety prosecutions9, 10.
- Professional servicesClaims about the services you provide, which professional indemnity covers9, 11.
- Also excludedIn one management liability wording: securities and capital raising claims, pollution, insolvency, and claims in US and Canadian courts11.
What directors face.
ASIC’s enforcement in 2025–26, and two recent cases.
36 people
From managing companies, 18 of them for five years, the longest ban ASIC can impose without going to court23.
- Star EntertainmentThe former chief executive was ordered to pay a $700,000 penalty and the former general counsel $400,000, and both were disqualified. Both have appealed. Seven non-executive directors were found not to have breached their duties, after a trial24, 25.
- Endeavour Securities (January 2024)Four directors were ordered to pay $390,000 in penalties in total, and each was ordered, or agreed, to pay $175,000 towards ASIC’s costs26.
Common questions.
Do small company directors have to have D&O insurance?
No law requires it. Directors’ duties still apply to every director, including directors of small companies and sole directors.
Is D&O insurance worth it?
It depends on the organisation and the risks its directors face, and a broker can talk it through. Directors can be personally liable, including for some of their company’s tax debts. A company also can’t indemnify its directors for everything, such as liabilities to the company itself or civil penalties ordered by a court.
What’s the difference between D&O and management liability insurance?
Management liability bundles D&O cover with other sections, such as employment practices, crime, statutory liability and tax audit costs. Some sections have lower sub-limits than the main limit.
How much does D&O insurance cost?
Only indicative ranges are published, such as $2,000 to $5,000 a year for a small private company with two to five directors, according to upcover.
Does D&O cover ATO director penalties?
Some policies have an extension for unpaid company taxes where the company is insolvent, usually with a lower limit. Taxes are otherwise excluded in the wordings we reviewed.
Can the company pay the D&O premium?
Yes, except for cover against a wilful breach of duty to the company, or improper use of position or information (Corporations Act s 199B).
Can a company indemnify its directors instead of insuring them?
Only partly. The Corporations Act stops a company indemnifying officers for liabilities to the company, pecuniary penalties and conduct not in good faith.
Do not-for-profit board members have duties?
Yes. Charity board members have duties under the ACNC’s Governance Standard 5, and state associations laws impose similar duties.
Is fraud covered?
Defence costs are generally paid until fraud is proven or admitted. After that, the fraud exclusion applies and the costs may have to be repaid.
Are ASIC investigations covered?
The wordings we reviewed cover the legal costs of formal investigations. A company can also indemnify the costs of responding to an ASIC investigation before proceedings start.
Are fines and penalties covered?
Only fines that can legally be insured, usually with a lower limit. A company can’t indemnify an officer for a pecuniary penalty order.
What happens to my cover if I resign?
D&O is usually claims-made, so what matters is the policy in force when a claim is made. Some policies include run-off for retired directors, and liability for earlier director penalties survives resigning.
Do I need a director ID?
Yes, before you’re appointed a director. It’s free, and you keep it for life.
Still have a question? A broker can talk it through with you.
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Guides on Directors & Officers Insurance.
Plain-English answers, with sources, to the questions businesses ask about this cover.
Related cover.
Other cover often considered alongside Directors & Officers Insurance.
Sources.
- Corporations Act 2001 (ss 180–184, 199A–199C), Federal Register of Legislation, compilation of 19 September 2026
- Corporations Act 2001 (ss 1272C, 1317G), Federal Register of Legislation, compilation of 19 September 2026
- Director penalties, ATO, 16 April 2026
- Governance Standard 5: duties of responsible people, ACNC
- Who needs to apply for a director ID, and when, Australian Business Registry Services, 29 April 2025
- Managing your director obligations, ASIC
- What is directors and officers insurance?, AICD
- D&O insurance for non-executive directors, AICD
- Forefront Portfolio Policy wording, Chubb, February 2025
- Evolution D&O Liability wording, DUAL Australia, November 2022
- Management Liability wording, DUAL Australia, November 2020
- How much does D&O insurance cost in Australia?, upcover, 10 July 2026
- How much does management liability insurance cost?, upcover, 9 July 2026
- Startup business insurance costs, upcover, 28 July 2026
- D&O insurance limits by startup stage, upcover, 13 August 2026
- Management Liability Insurance, BizCover, data from 2024–25
- Pacific insurance market rates, Q2 2026, Marsh, July 2026
- Global commercial insurance rates fall 6% in Q2 2026, Marsh, 23 July 2026
- D&O market update for ASX listed companies, Aon, 2026
- Quarterly general insurance performance statistics, APRA, 27 August 2026
- Abolition of duty on business insurance premiums, State Revenue Office Victoria
- ASIC secures record $830 million in civil penalties in 2025–26, ASIC, 20 July 2026
- ASIC protects consumers by removing high-risk financial sector participants, ASIC, 10 August 2026
- Former Star Entertainment executives disqualified and ordered to pay penalties, ASIC, 17 June 2026
- Federal Court finds two Star Entertainment executives breached duties; non-executive directors did not, ASIC, 5 March 2026
- Federal Court hands down $390,000 in directors’ duties penalties, ASIC, 10 January 2024
- Management liability and directors and officers products, DUAL Australia
