Directors and Officers Insurance: Are you Covered?

When conducting business, it is essential that company directors have adequate Directors and Officers Liability insurance. An eminent High Court judgement involving former Mainzeal Property and Construction Limited directors clearly demonstrates the persevering need for such insurance.

In this particular instance the directors were found to have been trading recklessly while the business was insolvent and, as such, breached their duties over a number of years. Their actions brought about serious consequences, with unsecured creditors recruiting liquidators in the pursuit of compensation for their losses.

When reaching a final decision, the Court critically considered the directors’ insurance cover. In this case, the liability insurance held by involved directors was determined to hold no bearing on their overriding accountability. However, there was still the potential for liability insurance to impact the amount of damages awarded to affected parties. It is, of course, important to note that the extent to which this is ensued will always be reliant on the type of liability cover that was taken out.

There were an array of contributing factors that played a significant role in the outcome of the Mainzeal Property and Construction Limited case. The loss experienced by creditors was identified as being in the capacity of $110m. This figure was adjusted appropriately, taking into account additional influencing factors and relevant costs. The four directors involved were found to be liable for a total of $36m, which was divided between them accordingly.

A key aspect of this case was the enlistment of litigation funders by liquidators. This involves a third-party contributing finance to the proceedings and, as a result of this, taking a significant amount of the winnings if the case is successful. In the instance of Mainzeal Property and Construction Limited, litigation funding assisted the affected creditors in building an exceptional case and increased the risk profile of directors.

In future, the involvement of litigation funders in such circumstances is likely to continue to increase the difficulty faced by company directors when defending liability cases. Such approach provides claimants with greater access to the capabilities needed to readily form a strong claim, impacting the prosperity of opposing directors’ arguments.

The Mainzeal Property and Construction Limited case acts as a clear indication of the imperative role Directors and Officers Insurance plays in liability cases. It is crucial that the directors of an organisation are taking appropriate precautions, gaining assistance from a trusted underwriter to ensure that they are covered in difficult times.

For more information on Directors and Officers Insurance, get in touch with your insurance advisor today.


Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

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