D&O insurance for directors and officers

Anyone who sits on a board of directors or runs a company is liable for their decisions with their personal assets. It is one of the least understood aspects of Swiss governance: the liability of directors and officers is personal, unlimited and can be enforced even years later. D&O (Directors & Officers) insurance was created precisely to protect these assets.

The personal liability of corporate bodies

The Code of Obligations establishes that directors and the persons responsible for management are liable, towards the company, the individual shareholders and the creditors, for the damage caused by a breach of their duties, whether intentional or due to negligence. Fraudulent intent is not required: a fault in management is enough.

Some recurring examples:

Delay in notifying the court in the event of the company’s over-indebtedness.
Failure to pay social security contributions or withheld taxes.
Investment or financing decisions taken without adequate diligence.
Breaches of legal or statutory obligations.

Liability is joint and several: a creditor may seek redress from a single director for the entire damage.

What a D&O policy covers

D&O intervenes when a liability claim is brought against a person who holds (or has held) a corporate function. In practice it covers:

The legal defence costs, often the most immediate cost even when the claim is unfounded.
The compensation owed to third parties in the event of established liability.
The costs of proceedings, investigations and, in certain policies, reputation-management expenses.

It is important to understand that D&O protects the natural persons (and, in certain modules, the company too when it indemnifies its own bodies), not the company’s operational damages, which remain the domain of the corporate liability (public liability) insurance.

Who needs it

D&O is not reserved for large multinationals. It makes sense in particular for:

Companies with external investors or non-operating shareholders, who tend to hold decisions to account.
Companies with independent directors or external professionals on the board: many accept the appointment only with a D&O in place.
Businesses in a phase of growth, fundraising or extraordinary transactions (mergers, acquisitions, capital increases), where the risk of disputes increases.
Situations of financial difficulty, where creditors’ claims grow.

Even in a family-run SME, whoever signs as a director takes on real liability.

Points of attention in the contract

Some technical aspects make the difference:

D&O policies generally operate on a claims made basis: what counts is the moment the claim is brought, not when the event occurred. Hence the importance of the periods of retroactivity and of run-off (cover after leaving office).
The exclusions: wilful misconduct, established fraudulent acts and personal criminal sanctions typically remain outside.
The sum insured must be commensurate with the size and complexity of the company.
Cover for outgoing directors, often overlooked.

Governance comes before insurance

D&O reduces the economic consequences, but does not replace good governance. Accurate board minutes, documented decisions, compliance with legal deadlines and monitoring of the financial situation remain the first line of defence. Insurance covers the mistake, not systematic negligence.

How we help you

We assess the liability profile of your corporate bodies, the structure of the board and the phase the company is in, to understand whether and how D&O cover is advisable — integrating it into a solid governance framework. Let’s talk about protecting your directors.