Business Insurance For Directors and Officers

Compare business insurance quotes with Savvy to find the best policy for directors and company officers.

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, updated on July 27th, 2023       

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Directors and senior officers have plenty to think about when running a company. That’s why having insurance to cover management liability risks is a sensible decision. It can protect directors and officers from a wide range of risks, including personal liability, leaving them free to concentrate on the serious business of running a profitable company. 

You can compare quotes for all types of business insurance here with Savvy. Just answer a few simple questions about your business and the insurance you require and you’ll soon have multiple quotes from a range of respected insurers to compare. Start the process with us today to make sure you get the best-value insurance for your directors and officers today. 

What types of insurance will protect company directors and officers?

Some of the main types of business insurance that offer protection to company directors, managers and senior officers are as follows: 

Management liability insurance 

Management liability insurance is the main type of insurance that will protect company directors against the following risks: 

  1. Claims of statutory breaches of duty (for instance, breaches of OHSW legislation) 
  2. Statutory fines and penalties imposed as a result of alleged breaches 
  3. Defamation claims 
  4. Sexual harassment claims 
  5. Unfair dismissal claims 
  6. Other charges resulting from OHS incidents or accidents 

Management insurance is highly customisable, so you can choose whichever type of insurance you feel is necessary to make up your business package. Cover is available for amounts ranging from $1 million to $5 million. Choose from: 

  1. Directors and officers liability – protecting against losses due to claims of alleged wrongful acts in their capacity as a company director or officer. 
  2. Corporate liability – protects the company itself against claims of alleged wrongful acts 
  3. Employment practices liability – which covers the company from claims made by employees concerning working conditions or laws 
  4. Statutory liability – which protects the company itself and senior management and employees from allegations of breaches of key legislation 
  5. Crime – covers against direct financial loss as a result of theft or attempted theft from your business premises by either an employee or third party 
  6. Tax audit – which covers any additional expenses necessary to comply with an ATO-ordered tax audit 
  7. Superannuation trustees liability – which provides protection against any alleged act, error or omission arising due to a person’s status as a Superannuation Trustee 

What it covers: 

  1. Legal and defence costs 
  2. Investigation costs 
  3. Fines and penalties 
  4. Damages awarded 
  5. Claimant costs awarded against the insured 

Professional indemnity insurance 

The greatest risks faced by directors and company officers often relate to legal liability. If you’re a working director or company officer who still offers a service or advice directly to clients in addition to running the company, you may also wish to consider professional indemnity insurance

This type of insurance covers you against claims the service you provided or advice you offered was negligent or fell short of expected professional standards. It’s a very important type of insurance to have in certain industries and is a compulsory part of membership for many professional associations. Cover is available starting from $250,000, but can extend up to $10 million or more. 

What it covers 

  1. Cover for your legal defence costs 
  2. Payment of compensation if there’s a successful claim against you 
  3. Payment of court-awarded damages to the litigant 
  4. Cover for the cost of disciplinary proceedings or investigations 

Personal accident and illness insurance  

Since you rely on your good health to continue running your company, taking care of your physical wellbeing should be a high priority. Accident and sickness insurance can provide cover for you if you become sick and are unable to work, providing a weekly replacement income if you’re injured or ill. 

What it covers: 

  1. Loss of income as a result of an injury or illness 

Optional extras can include: 

  1. Death benefits 
  2. Disablement benefits 
  3. Payment of business expenses during your recovery period 

What isn’t covered under business insurance for directors and officers?  

The most common exclusions across these types of cover are:  

  1. Injury to yourself or your employees 
  2. Insolvency  
  3. Wages liability  
  4. Superannuation liability 
  5. Unlawful activity or criminal negligence 
  6. Reckless behaviour or intentional damage 
  7. Contractual liabilities 
  8. Prior known circumstances or risks  

How much will business insurance cost to protect directors and officers? 

There is no set cost for an insurance policy, as each applicant and situation is different. Many factors influence the cost of business insurance, including the following:   

  • The state you’re in  
  • Whether you live in a rural or urban area 
  • The position and job specifications of the insured persons  
  • The business size or turnover  
  • The number of employees 
  • The company’s insurance history 
  • Whether any recent insurance claims have been made 

The main factor which will affect the cost of your insurance is the industry your company is in. All businesses in Australia are classified according to the risk their industry poses, and are allocated a risk ratio. These ratios are used by insurers to calculate the comparative risk of any one business compared to another.  However, the cost of public liability insurance for a company in Victoria may not be the same as the cost for a similar company in Brisbane, as location also plays a part in determining risk. 

You can find out how much insurance will cost to cover your directors and officers (including how much public liability insurance will cost if you feel this type of insurance is also important) by comparing quotes right here with Savvy. You’ll be able to consider a range of offers from a variety of insurers to help you secure the best policy for you and your business. 

Why do company directors and officers need business liability insurance?

No business is immune from allegations of wrongdoing, mismanagement, misconduct or breaches of vital legislation. Employees can make up false allegations as a form of revenge, and no matter how hard you try to encourage them to abide by all relevant legislation, you can’t stand over everyone all the time to ensure 100% compliance. On top of that, accidents do happen, whether they are deemed to be preventable or unforeseen. 

Management liability insurance protects anyone who has responsibility within a company from the threat of personal liability. This means if the claim or case goes against you, you won’t have to sell your home or declare bankruptcy to pay for your legal defence or expensive damages claims. 

As such, no matter whether you’re a senior company officer, director or a consultant offering management advice, you should consider getting business management liability insurance to protect you and your family’s personal assets. 

Types of business insurance

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Common questions about business insurance for directors and officers

What happens to management liability insurance when a director leaves a company?

The cost of the management insurance will be based on factors relating to the one particular director, such as their age, experience and qualifications. Therefore, when a company director moves on and is replaced by another, the company holding the insurance policy will have to contact their insurance company and get another quote to cover the new director.  

Can directors still be sued even after they’ve left a company?

Yes – a company director can still be sued up to six years after they leave their position, so it’s important to have professional liability insurance for at least seven years after having a director’s role. 

What information will I need to make an insurance claim?

The information you should have to hand when you contact your insurance company to make a claim will include: 

  • The name of the policyholder 
  • The policy number and start date (which can be found on the Certificate of Currency) 
  • A detailed description of the incident, or what exactly happened, including specific dates and times 
  • Contact details of any other parties involved, or witnesses to the event 
  • Details of your police report number (if a crime took place) 
  • Your bank details for settling the claim 
Are business insurance premiums tax-deductible? 

Yes – the Australian Taxation Office recognises that having business insurance is a legitimate cost of doing business, so the full cost of your insurance premiums can be claimed as a business expense by yourself and, if relevant, by the company. 

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Savvy does not compare all business insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.

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