D&OJul 25, 2026
D&O insurance for SMEs vs large companies
D&O insurance is not a one-size product: it changes with the size and structure of the company. Here is what separates the mid-market from large risks and how to size the limit.
Read→Area of cover · 01
D&O insurance for directors and officers
The only policy in the programme that protects not the company but the people who run it, and against an exposure that reaches their personal assets without limit.
01Overview
What it is
D&O insurance answers for claims brought against directors, board members and officers over their management decisions. What sets it apart is whose assets it protects: not the company's, but the individual's. Article 236 of the Spanish Companies Act makes directors liable to the company, to the shareholders and to the company's creditors for damage caused by acts or omissions contrary to the law or the articles, or in breach of the duties of office — and that liability has no limit beyond the director's own estate.
Two details of that provision explain why the policy exists. The first is that culpability is presumed, unless proven otherwise, where the act is contrary to the law or the articles: the burden of showing that one acted properly falls on the director. The second is that not even the shareholders' approval exonerates. A decision endorsed by the general meeting remains, as against a creditor, the personal liability of whoever carried it out.
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At a glance
- Limitation period
- 4 years
- Scope
- De facto directors too
- Trigger
- Claims made
- Broker registered with the DGSFP
- J0140
A director's liability does not arise from insurance, it arises from statute. Article 236 of the Spanish Companies Act provides that directors are liable to the company, to the shareholders and to the company's creditors for damage caused by acts or omissions contrary to the law or the articles, or carried out in breach of the duties inherent in the office, provided wilful misconduct or fault is present.
And it adds three qualifications worth reading slowly. Culpability is presumed, unless proven otherwise, where the act breaches the law or the articles. Approval by the general meeting never exonerates. And the liability also reaches the de facto director: whoever performs the functions without appointment, under a void or expired one, and whoever the formal directors act on the instructions of.
Two dates decide a D&O claim
In this class the policy almost always operates on a claims made basis rather than on occurrence: what triggers cover is when the claim arrives, not when the decision was taken. That makes two dates in the wording the most important parameter of the contract, ahead of the limit.
The first is the retroactive date: how far back cover reaches. The second is the extended reporting period: how long after the contract ends claims are still admitted for acts committed during it.
Article 73 of the Insurance Contract Act admits both ways of delimiting it, with a floor on each — extended reporting of not less than one year, or retroactivity of at least one year — and expressly classifies them as limitative clauses under article 3. That is not a legal nicety: it means they must be specially highlighted and specifically accepted in writing, and that a temporal delimitation buried in the wording is open to challenge.
The moment of greatest exposure is changing insurer. If the new policy starts with a retroactive date shorter than the actual tenure of the office, a gap opens through which precisely what has not yet become time-barred will fall: the action prescribes after four years.
Why through a broker
As a brokerage registered with the Spanish insurance regulator, the Dirección General de Seguros y Fondos de Pensiones, under reference J0140, New Brokers acts on the client's mandate, not on any insurer's behalf.
In D&O that matters for a reason rarely mentioned at inception: the insured and the policyholder are not the same person. The company pays the premium, but the assets at stake belong to the director, and their interests do not always align with the company's — most visibly in an insolvency. Negotiating the wording with an eye on who each layer genuinely protects, rather than only on price, is the difference between a policy that responds and one that gets argued over.
02Covers
What is covered
Side A — the insured's personal assets
Responds directly to the director where the company cannot indemnify them, typically through insolvency or a legal prohibition. This is the layer that genuinely protects the individual.
Side B — company reimbursement
Returns to the company what it has advanced to defend or indemnify its directors, where its articles permit it and it chooses to do so.
Side C — the company's own liability
Covers the entity for securities claims, common in listed companies or those with market issuance. In private companies it is usually bought with restricted scope.
Legal defence costs
The cost of counsel from the first step onwards, including criminal proceedings brought against the director over matters connected with their management.
Provision of bail and bonds
The civil and criminal bonds a court may require to secure liabilities or to avoid personal precautionary measures.
Claims by the company and its shareholders
The corporate action for liability, brought by the company or in the alternative by a minority, and the individual action of shareholders or third parties directly harmed.
Creditor claims and insolvency
Those arising from the classification of an insolvency and from liability for company debts, which is how most claims reach the director of a private company.
Liability towards public authorities
Enforcement and liability-transfer proceedings, including tax and social security, to the extent that they are legally insurable.
Employment practices claims
Claims for improper employment practices brought against officers: discrimination, harassment or unfair dismissal attributed to their personal decision.
Extension to subsidiaries and new appointments
Cover for directors of investee companies and for those appointed during the policy period, whose inclusion is best left automatic in the wording.
03Limits
Limits and deductible
| Item | Statutory regime |
|---|---|
| Limitation period (art. 241 bis Companies Act) | 4 years from when the action could be brought |
| Presumption of fault (art. 236.1) | Where the act breaches the law or the articles |
| Approval by the general meeting (art. 236.2) | Never exonerates |
| Extended reporting in claims made (art. 73 LCS) | Not less than one year |
| Retroactive date in claims made (art. 73 LCS) | At least one year before inception |
Nature of claims made clausesLimitative (art. 3 LCS)
This table sets out the regime established by the Spanish Companies Act and the Insurance Contract Act, not the terms of any particular policy. That the temporal delimitation clauses are limitative means they must be specially highlighted and specifically accepted in writing. The limits, sub-limits and deductibles of the contract are governed in every case by its specific conditions.
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Go to the client area04Scope
What is not covered
The exclusions in a D&O policy separate the mistaken decision, which is insurable, from the deliberate act, which cannot be.
Wilful misconduct, fraud and improper personal gain, once established by a final judgment. Until then the policy usually advances defence costs, subject to repayment.
Prior claims or circumstances already known at inception and not disclosed in the proposal form.
Criminal fines and penalties, and any that the applicable jurisdiction declares uninsurable.
Bodily injury and property damage, which belong to the general liability policy, not to the directors' one.
Financial loss caused to a client by an error in delivering a service, which is professional indemnity territory.
Claims between insureds, other than those expressly admitted, such as the corporate action or those arising from insolvency proceedings.
The director's own remuneration and claims under their employment or senior management contract.
Facts occurring before the agreed retroactive date, which is the parameter most worth checking when changing insurer.
05Use cases
When you will be asked for it
Company insolvency and a finding of culpability
The company enters insolvency and the administrator or the creditors argue that the insolvency was aggravated, that the filing was delayed, or that proper accounts were not kept.
What it means
This is how most claims reach the director of a private company. Without D&O, defence costs come out of the director's own pocket from day one, with the company already lacking the assets to advance them: precisely the situation Side A exists for.
Transfer of tax liability
The tax authority attributes company debts to the director for failing to take the steps necessary to meet tax obligations, or for allowing them to go unmet.
What it means
The procedure is administrative before it is judicial, and its defence cost starts running immediately. Whether the transferred debt itself is insurable depends on its nature and on the jurisdiction; the defence costs do not.
A strategic decision that goes wrong
An investment, an acquisition or the closure of a business line that shareholders later regard as a management error, and over which the corporate action for liability is brought.
What it means
Article 226 protects business judgment where the director acted in good faith, without personal interest, on sufficient information and following an adequate decision-making process. Evidencing those four conditions takes documentation and technical defence, and that cost is what the policy covers even if the claim is ultimately dismissed.
06Process
How it is arranged
Mapping offices and companies
We identify who is exposed: the board, joint or several directors, attorneys with senior management powers, and directors of investee companies. The statute also reaches whoever acts as a director in fact, without formal appointment.
Assessing the real exposure
We review the group structure, the balance sheet, gearing, related-party transactions and any investment or divestment plans. D&O exposure grows with financial strain, not with size.
Placement and negotiation of the temporal scope
We compare the limit, sub-limits per insured and, above all, the retroactive date and the extended reporting period. Under a claims made trigger, those two dates decide more claims than the limit does.
Issue and support when a claim arrives
We issue the policy, check that notification of circumstances is properly set out, and represent you before the insurer from the first claim — which in D&O usually arrives as a letter, not as a lawsuit.
07Programme
Covers that work alongside this one
Professional indemnity / E&O
An error in delivering a service to a client belongs to professional indemnity; a management decision that harms the company or its creditors belongs to D&O. The boundary deserves to be written down.
General, employers' and product liability
Bodily injury and property damage to third parties fall outside D&O and belong to the company's liability policy.
Cyber
A serious incident can lead to personal claims against directors for a lack of diligence in overseeing security.
Environmental liability
An environmental breach creates liability for the company and, in parallel, possible personal liability for those who should have supervised it.
Credit and surety
The insolvency that triggers a claim against the director is usually preceded by bad debt that credit insurance would have cushioned.
08Common questions
Frequently asked questions
Is D&O insurance compulsory in Spain?
There is no general legal obligation to buy it. What does exist is the liability it covers: article 236 of the Spanish Companies Act makes directors liable to the company, the shareholders and the creditors with their personal assets. In practice it becomes compulsory by contract when an investor, a fund or an institutional shareholder comes in, as they routinely require it as a condition of joining the board.
Who exactly does the policy protect, the company or the individual?
The individual, principally. Side A responds directly to the director where the company cannot indemnify them, which is exactly what happens in an insolvency. Side B reimburses the company for what it has advanced, and Side C covers the company itself for securities claims, common only in listed entities. If one layer had to be kept, the one protecting personal assets is Side A.
Does D&O cover claims for tax or social security debts?
The costs of defending the proceedings are usually covered. Whether the transferred debt itself is covered depends on its nature and on what the applicable jurisdiction treats as insurable: a criminal penalty never is. This is one of the delimitations that varies most between wordings, and it is worth reading before signing rather than after the notification arrives.
What does a claims made trigger mean?
That what activates cover is not when the act occurred but when the claim is made. Article 73 of the Insurance Contract Act admits two variants: extending cover to claims made after the contract ends for a period of not less than one year, or restricting it to claims made during the policy period provided it covers acts occurring at least one year before. Both are limitative clauses under article 3, so they must be specially highlighted and specifically accepted in writing.
If I step down, am I still covered?
It depends on the extended reporting period in the policy and on the retroactive date of whatever replaces it. The action against directors becomes time-barred four years after it could have been brought, so the exposure comfortably outlives leaving the post. It is the review most often forgotten on resignation, and the one worth doing before signing off.
What information do you need to prepare a proposal?
The annual accounts for the last two financial years, the group structure with its investees, the composition of the governing body, the detail of related-party transactions and financing, and any claim or known circumstance that might give rise to one. If you have a current policy, its specific conditions and, very particularly, its retroactive date.
Related analysis
D&OJul 5, 2026
D&O insurance: what it covers and who needs it
D&O insurance protects the personal assets of directors and officers against claims arising from their management. We explain what it covers, what it excludes and who needs it.
Read→This information is for guidance only and is not binding. Covers, limits and exclusions are governed in all cases by the specific terms of each policy. New Brokers Correduría de Seguros, S.L., registered with the DGSFP under reference J0140.