The benefits of Directors Liability Insurance are likely to be well known to executives on the boards of large national or multi-national organisations, who are probably familiar with the risks of legal action, which go hand in hand with the responsibilities of their roles. The fact that the Directors of smaller companies, charities, trusts and other ‘not for profit’ organisations also face comparable risks is not widely recognised.

Directors and Officers (D&O) Liability Insurance Policies have historically had great importance to public corporations. Providing a defense or immunity for corporate officers and directors against derivative suits, securities and fraud violations, bankruptcy cases, creditor cases and bank failures, D&O policies generally go hand-in-hand with the title of "executive" within a public company.

The directors and officers of a company play a vital role in making business decisions. However, some of their business decisions may fail due to various causes beyond their control. The failure of such decisions may drag the companies and its directors and officers into financial problems. They may be asked to pay damages and compensate third parties for the losses suffered by them due to the bad decisions of a company.