Directors and officers insurance (sometimes referred to as D&O cover) coverage protects your legal liability as a Director & Officer of a company.
If you accept a position as a director or officer you must be sure that you have sufficient qualifications and experience to fulfil the role. You must act with good faith at all times and in the best interests of the company.
Over 250 statutes impose obligations on directors. In the Companies Act alone there are 200+ provisions for imposing fines and penalties on directors. As a director you also owe a statutory duty to your employees and you may also owe obligations to third parties. If your company operates overseas, you may even be subject to local legislation and regulations of which you are not aware. Regulatory bodies (FSA, Health & Safety Executive, SFO, DTI to name a few!) have increasing powers of investigation and can focus on the actions of individual directors.