Who needs directors and officers insurance in Australia?

D&O insurance may be relevant wherever directors, officers, or board members can be personally named in claims or investigations connected to management decisions. The need comes from personal liability. Directors can have personal duties under the Corporations Act 2001 and other laws. If those duties are alleged to be breached, the claim may be against the person, not just the company.

For a full guide on what D&O covers and how Sides A, B, and C work, see what is directors and officers insurance in Australia.

At a glance

• D&O may be relevant wherever directors or board members can be personally named in claims
• Common triggers: registering a Pty Ltd, raising capital, joining a board, financial difficulty
• NFP and strata committee members can also face personal exposure
• Sole traders without a company structure usually do not need standalone D&O
• D&O can be standalone or bundled within management liability
• upcover arranges directors and officers insurance for eligible Australian businesses.

I registered a Pty Ltd. Do I need D&O insurance?

A Pty Ltd creates limited liability for the company, but it does not remove personal liability for the director. Claims can come from creditors, co-directors, employees, suppliers, the ATO through director penalty notices, or ASIC. If the company cannot indemnify the director, personal financial exposure may arise. D&O or management liability may be worth reviewing once a company has directors making financial or operational decisions.

An investor says I need D&O insurance. Why?

Investors may ask for D&O as part of a funding round, especially where venture capital, private equity, or external board seats are involved. When investors join the cap table or take board seats, the director's decisions affect other people's capital. If the company misses milestones or overstates its position during a raise, directors can face claims alleging misleading conduct or breach of duty.

D&O insurance may help cover defence costs in that scenario, subject to policy terms. Experienced directors and board members will confirm D&O is in place before accepting an appointment.

I have been asked to join a board. Should I check D&O first?

Before accepting a director role, whether for a private company, an NFP, or an advisory board, it is worth confirming whether D&O insurance is in place and whether it covers you.

A former director can still face claims after leaving the role, depending on the type of claim and limitation period. Run-off provisions in the D&O policy may extend cover to past directors, but not all policies include this. If the organisation has no D&O cover, the incoming director takes on personal exposure without insurance protection. Ask for a copy of the D&O policy schedule, not just a verbal confirmation. Check whether it covers your role and whether run-off applies after you leave.

For more on the appointment process, see a guide to adding a director to a company.

I am on an NFP committee. Can I be personally liable?

NFP directors, officers, and committee members can still have personal duties, even if they are unpaid. The exact duties depend on the organisation's structure, such as whether it is a company limited by guarantee, incorporated association, charity, or other entity. A board member can be personally named in governance disputes, financial mismanagement claims, or regulatory investigations.

D&O or management liability may be relevant where the organisation manages grants, donations, member funds, employees, volunteers, or regulated services. The size of the organisation does not determine the exposure. The decision-making role does.

My company is in financial trouble. Do directors need D&O now?

D&O risk often increases when a company is under financial stress. Liquidators and creditors may allege directors continued trading while the company was insolvent under s588G. ATO director penalty notices can create direct personal liability for unpaid PAYG and superannuation.

If D&O is not already in place, arranging it during financial difficulty may be more complex because insurers assess financial condition as a key underwriting factor. Side A cover is particularly relevant during insolvency because the company may be unable to indemnify.

For more on director exposure, see understanding employer liability for company directors.

I am a sole trader. Do I need D&O insurance?

Standalone D&O is usually less relevant for sole traders because there are no company directors or officers in the legal sense. A sole trader is the business. There is no separate legal entity with a board.

Other covers are more likely to be relevant, such as professional indemnity for advice or service errors, public liability for third-party injury or property damage, or personal accident and sickness for income protection. If the sole trader later registers a Pty Ltd and becomes a director, D&O or management liability may then become relevant.

I am on a strata committee. Am I covered?

Strata committee members can face claims from lot owners over governance decisions, building defects, levies, or financial management. Standard corporate D&O is not always the right product. Strata management liability or office bearers liability is often more appropriate. Coverage depends on the owners corporation policy, state legislation, and policy wording.

When D&O becomes more relevant

Most of these moments share a common thread: the number of people affected by the director's decisions is increasing, or the consequences of those decisions are becoming more serious.

• Registering a Pty Ltd and appointing directors
• Raising capital or onboarding investors
• An investor, lender, or contract requiring D&O as a condition
• Appointing the first external or independent director
• Hiring employees
• Facing financial difficulty or restructuring
• Preparing for a sale, merger, or IPO
• A co-director or shareholder dispute arising

D&O need-assessment map

Many SMEs access D&O through management liability. Standalone D&O may suit listed companies and investment-backed businesses. See management liability vs D&O.

Depending on the policy, D&O may help with legal defence costs, investigation expenses, company indemnity reimbursement, and certain settlements or damages. It does not replace professional indemnity, public liability, cyber insurance, or crime insurance.

What you need for a D&O quote

You are usually asked for your ABN, company structure, revenue, number of directors, claims history, preferred limit, and whether you want standalone D&O or management liability.

upcover arranges directors and officers insurance for eligible Australian businesses. Get a quote.

How upcover can help

upcover arranges directors and officers insurance as a standalone product and as part of management liability for eligible Australian businesses.

• 70,000+ businesses covered across Australia.
• 4.9/5 customer rating.
• 80+ insurance partners.

For related guides, see what is D&O insurance, D&O cost, and insured vs insured exclusion.

upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078.

Frequently asked questions

Who needs D&O insurance in Australia?

D&O may be relevant for organisations where directors, officers, or board members can be personally named in claims or investigations, depending on structure and policy wording. This can include private companies, startups, NFPs, and listed entities.

Does a Pty Ltd director need D&O insurance?

A Pty Ltd creates limited liability for the company but not for the director personally. D&O or management liability may be worth reviewing.

Do startups need D&O insurance?

Startups may review D&O when raising capital, appointing directors, or onboarding investors. Investors may ask for D&O as part of a funding round.

Do NFP board members need D&O insurance?

NFP directors and committee members can have personal duties even if unpaid. The exact duties depend on the organisation's structure. D&O or management liability may be relevant.

Do strata committee members need D&O insurance?

Strata committee members can face claims from lot owners. Standard corporate D&O is not always the right product. Strata management liability or office bearers liability is often more appropriate.

Does a sole trader need D&O insurance?

Standalone D&O is usually less relevant for sole traders because there are no company directors or officers. Professional indemnity, public liability, or personal accident may be more appropriate.

Is D&O insurance only for listed companies?

No. Listed companies often have more complex D&O needs, but private companies, startups, NFPs, and associations can also have director exposure.

Is D&O insurance included in management liability?

Management liability may include a D&O section alongside EPL, statutory liability, crime, and tax audit. Standalone D&O provides dedicated director limits and may be more relevant for larger or investment-backed organisations.

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_{The information in this article is general in nature and provided for informational purposes only. It does not constitute personal insurance, financial, or legal advice. Director duties under the Corporations Act 2001 are subject to change and should be verified with current legislation. Cover types, inclusions, and exclusions vary between insurers and policies. Always read the relevant Product Disclosure Statement before purchasing. All insurance products arranged through upcover are subject to the terms, conditions, limits and exclusions in the relevant PDS. Before deciding whether a product is right for you, consider your circumstances. upcover Pty Ltd ABN 17 628 197 437, CAR 1299211 of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078.}