Originally published in The Lawyer on March 18, 2013.

It would be a mistake to think that directors and officers (D&O) insurance provides a blanket indemnity. D&O policy wordings are complex and technical.

Frequently, coverage is subject to a number of exclusions, some of which may be introduced through addenda or endorsements, Many insurers look to provide coverage on the basis of their standard terms which can contain provisions that limit the scope of cover or the ability of directors to access it. Many insurers are reluctant to provide broad coverage in respect of investigations unless asked, given the potential expense involved.

This is against a backdrop of English insurance law that is often seen as being favourable to insurers. The duty of disclosure that arises on purchasing any policy can be onerous as it requires every fact material to the risk to be disclosed in pre-contractual discussions, failing which the insurer can avoid the policy - that is, tear it up and tr eat it as if it never existed. Also, many policies contain strict requirements on the notification of claims and potential claims. Failure to comply may jeopardise coverage.