Directors and Officers Insurance

D&O insurance provides comprehensive protection for legal defence costs, including lawyers' fees, court costs, and all related legal expenses incurred when defending claims against directors or officers. This ensures individuals don't face these mounting costs alone during stressful legal proceedings.

The policy covers settlements and judgments that must be paid following legal actions, protecting the personal assets of directors and officers. This includes claims arising from alleged wrongful acts, negligent decisions, errors in judgment, or breaches of fiduciary duty made in their capacity as company leaders.

Critically, D&O insurance covers breaches of statutory acts by directors or officers, including unknowing violations related to the Commerce Act, Companies Act, Consumer Guarantees Act, Fair Trading Act, and other NZ legislation. The policy prevents the financial burden from falling solely on individuals, covering penalties, fines, and defence costs associated with regulatory investigations and proceedings.

Directors and officers insurance premiums are calculated based on several key factors:

• Company size and revenue – Larger organisations with higher turnover typically face greater exposure and higher premiums
• Industry sector – Higher-risk industries such as financial services, healthcare, and technology attract higher premiums than lower-risk sectors
• Number of directors and officers – More individuals requiring coverage increases the policy cost
• Claims history – Previous claims against directors or the company significantly impact pricing
• Level of cover required – Higher policy limits provide greater protection but increase premium costs
• Company structure – Publicly listed companies face higher premiums than private entities due to increased shareholder risk

Directors and officers insurance in NZ typically costs between $50 to $100 per month for smaller private companies, with premiums increasing for larger organisations and those in higher-risk sectors.

What Is Directors and Officers Insurance?

Directors and officers insurance — commonly known as D&O insurance — is a specialised form of liability cover designed to protect individuals who serve as directors, officers, or senior managers of a company or organisation. In New Zealand, directors and officers can be held personally liable for decisions made on behalf of the business, even when those decisions were made in good faith and with the best intentions.

When a legal claim is brought against a director or officer, the financial consequences can be severe. Legal defence costs alone can run into hundreds of thousands of dollars, and settlements or court-ordered judgments can reach into the millions. Without D&O insurance, these costs fall directly on the individual — threatening their personal savings, family home, and financial future.

Gerrards works with leading New Zealand insurers to arrange D&O coverage tailored to the specific needs and risk profile of your organisation, whether you're a small private company, a growing mid-market business, a not-for-profit, or a publicly listed entity.

Who Needs Directors and Officers Insurance?

Any organisation that has individuals in leadership roles carries D&O exposure. If directors or officers make decisions that negatively affect shareholders, employees, regulators, customers, or creditors, those individuals can face personal legal action. D&O insurance is relevant for:

• Private companies – Including family-owned businesses, where directors often have personal financial stakes and face claims from co-directors, shareholders, or creditors
• Publicly listed companies – Increased shareholder scrutiny, securities regulations, and regulatory oversight create elevated D&O risk
• Not-for-profit organisations and charities – Trustees and board members face the same personal liability risks as directors of for-profit companies
• Start-ups and growth businesses – Investor-backed companies often require D&O cover as a condition of funding rounds
• Companies with international operations – Cross-border exposure creates additional regulatory and legal risk for directors
• Organisations undergoing significant change – Mergers, acquisitions, restructures, or insolvency proceedings all heighten D&O claims risk

In short, if your organisation has a board or senior management team, D&O insurance should be part of your risk management strategy.

What Does Directors and Officers Insurance Cover?

A well-structured D&O policy from Gerrards typically includes the following core areas of protection:

• Legal defence costs – Lawyers' fees, court costs, barrister fees, and all associated expenses incurred in defending a claim against a director or officer
• Settlements and judgments – Amounts paid in settlement of claims or awarded by a court against directors or officers personally
• Statutory breaches – Coverage for alleged or actual breaches of New Zealand legislation, including the Companies Act 1993, Commerce Act, Fair Trading Act, Consumer Guarantees Act, and employment legislation
• Regulatory investigations – Defence costs and related expenses arising from formal investigations or prosecutions by the Financial Markets Authority (FMA), Commerce Commission, or other regulatory bodies
• Shareholder derivative actions – Claims brought by shareholders on behalf of the company alleging mismanagement or breach of fiduciary duty
• Employment practices claims – Claims by employees alleging wrongful dismissal, discrimination, harassment, or breach of employment obligations made against individual directors or officers
• Insolvency-related claims – Protection for directors and officers facing claims from liquidators, creditors, or administrators during insolvency proceedings

Policies can also be extended to include company reimbursement coverage (Side B) and entity coverage for securities claims (Side C) depending on your organisation's needs.

What Is Typically Excluded?

Like all insurance policies, D&O cover has exclusions. Common exclusions include:

• Fraud and dishonesty – Deliberate fraudulent or criminal acts are not covered, though defence costs may be covered until fraud is established
• Personal profit and advantage – Claims arising from directors gaining personal profit or advantage to which they were not entitled
• Bodily injury and property damage – These are covered under other policies such as public liability or employers' liability insurance
• Prior known claims – Claims or circumstances known to the insured prior to policy inception that were not disclosed
• Pollution liability – Environmental damage claims are generally excluded unless a specific extension is purchased

Gerrards will clearly explain all exclusions and conditions when arranging your cover, so there are no surprises when you need to make a claim.

D&O Insurance and New Zealand Law

New Zealand's Companies Act 1993 imposes significant duties on company directors, including duties of care, diligence, and good faith. Directors can be held personally liable for breaches of these duties, trading while insolvent, authorising unlawful distributions, and failing to maintain proper financial records.

Beyond the Companies Act, directors and officers face potential liability under the Financial Markets Conduct Act 2013, the Health and Safety at Work Act 2015, the Employment Relations Act 2000, and various other pieces of legislation. The regulatory environment has become increasingly complex, and the consequences of breaches — even unintentional ones — have become more severe in recent years.

The Financial Markets Authority has demonstrated a willingness to take enforcement action against directors and officers of New Zealand companies, and the courts have upheld significant personal liability judgments. D&O insurance provides a critical financial safety net in this environment.

How Much Does D&O Insurance Cost in New Zealand?

The cost of directors and officers insurance varies considerably depending on the size, structure, and risk profile of your organisation. As a general guide:

• Small private companies – Policies typically start from around $50 to $100 per month for qualifying businesses with straightforward risk profiles
• Mid-market private companies – Premiums generally range from a few thousand dollars to tens of thousands of dollars annually depending on revenue, sector, and claims history
• Publicly listed companies – Premiums are significantly higher due to increased shareholder exposure, securities regulation, and the potential scale of claims
• Not-for-profit organisations – Often able to access more competitive premiums, particularly through specialist insurers with dedicated not-for-profit products

The key factors that influence your premium include company revenue and balance sheet size, the number of directors and officers requiring coverage, your industry sector and its associated risk profile, your claims history, the policy limits and deductibles you select, and whether your company is privately held or publicly listed.

Gerrards will shop your risk across 20+ insurers to find the most competitive pricing while ensuring you have the right level of protection.

Why Choose Gerrards for D&O Insurance?

Gerrards is an independent New Zealand insurance broker, which means we work for you — not for the insurance companies. When we arrange your D&O cover, our sole focus is on securing the best possible protection at a competitive price for your organisation's specific circumstances.

Our team understands the New Zealand business landscape, the legislative environment that directors and officers operate in, and the types of claims that are most common in the local market. We don't offer a one-size-fits-all solution. We take the time to understand your business, identify your exposures, and arrange cover that genuinely protects the individuals who lead your organisation.

We work with a broad panel of local and international insurers, giving us access to competitive pricing and specialist D&O products that may not be available through direct channels or less experienced brokers. And when you need to make a claim, we're in your corner — advocating on your behalf to achieve the best possible outcome.

Frequently Asked Questions About D&O Insurance

Is D&O insurance tax deductible in New Zealand?
D&O insurance premiums are generally deductible as a business expense. Gerrards recommends consulting with your accountant or tax adviser to confirm the treatment for your specific circumstances.

Does the company pay for D&O insurance?
Yes, in most cases the company pays the premium for D&O insurance covering its directors and officers. The company has a strong interest in maintaining this coverage to attract and retain quality board members and leadership.

What happens if a claim is made after a director leaves the company?
D&O policies can include run-off coverage (also known as tail coverage) which extends protection to former directors and officers for acts that occurred during their tenure, even after they have left the organisation. This is particularly important during mergers, acquisitions, and wind-ups.

Is D&O insurance the same as management liability insurance?
Not exactly. Management liability insurance is a broader product that typically combines D&O coverage with additional covers such as employment practices liability, crime insurance, and statutory liability in a single bundled policy. Gerrards can advise on whether a standalone D&O policy or a management liability package is most appropriate for your organisation.

How quickly can I get covered?
For smaller private companies with straightforward risk profiles, Gerrards can often arrange proof of insurance on the same day. Larger organisations, publicly listed companies, and those with complex risk profiles may require more detailed underwriting, which can take one to two weeks.

Get a Directors and Officers Insurance Quote

Protecting the personal assets of your directors and officers is one of the most important risk management decisions your organisation can make. Gerrards makes the process straightforward — from understanding your needs, to comparing options across leading insurers, to arranging cover and supporting you if a claim arises.

Contact the Gerrards team today on 0800 374 691 or submit an enquiry through our online form to get a tailored D&O insurance quote for your New Zealand business or organisation.