What is a D&O (Directors and Officers) insurance policy and what is it for?
In Switzerland, as in every country in the world, administrators and executives make strategic decisions every day that may expose them to legal actions brought by shareholders, employees, authorities, or third parties.
The D&O (Directors and Officers Liability Insurance) is an insurance policy that protects:
- Administrators of SA, Sagl and associations
- Executives and senior managers
- The company itself, if included in the policy
D&O covers legal costs, compensation payments and financial damages arising from errors, omissions, negligence or breaches of law in the performance of their duties.
Legal case: Liability for gross negligence
A decision of the Cantonal Insurance Court of Ticino (ruling 31.2023.4 of 16 June 2023) established that a de facto administrator, even without actively participating in the day‑to‑day management of the company, is still held liable for gross negligence if he or she fails to exercise adequate control.
In this specific case, the administrator did not have competence over payments and did not benefit from signing rights, but his or her passivity was considered a breach of the duty of care. The Court emphasised that the lack of action, despite awareness of unpaid payments, constitutes gross negligence and does not exempt the administrator from his or her responsibilities. (Source: Entscheidsuche+1)
Risks for administrators without D&O insurance
Without a D&O policy, administrators are personally exposed to significant financial risks. In the event of legal actions or claims for compensation, they may be required to respond with their private assets. D&O policies provide essential protection by covering legal costs and damages arising from errors or omissions in corporate management.
Why is it essential in Switzerland and in the Canton of Ticino?
- Personal financial liability
According to the Swiss Code of Obligations (CO, art. 754), an administrator is personally liable with his or her private assets for damages arising from negligence or breaches of duties. - Strict cantonal case law
The Court of Appeal of the Canton of Ticino has repeatedly confirmed that even a sole administrator is required to exercise “active supervision” and is liable if he or she fails to pay AVS contributions or does not monitor management (source: entscheidsuche.ch). - Increasing risks in key sectors
Some sectors are at high risk:- Trust and tax advisors (professional errors)
- Construction (workplace accidents)
- Healthcare (processing of sensitive data – GDPR)
- Environmental services (environmental liability)
What does a D&O policy cover in Switzerland?
| Coverage | Description |
|---|---|
| Legal costs | Legal defence in civil and criminal proceedings for liability |
| Compensation | Payments to third parties in case of judgment or settlement |
| Retroactivity | Coverage for events prior to the policy inception (if not known) |
| Extension to the company | Possibility to insure the legal entity itself |
| Employer liability | In case of claims from employees |
When is it worth taking out a D&O policy?
- Are you the sole administrator of a Sagl?
- Are you a member of a board of directors?
- Do you manage a trust company or a consulting firm?
- Do you have foreign clients or operate in regulated sectors?
In all these cases, a D&O policy is essential to protect yourself and the business you manage. In Ticino, where many SMEs have lean and family‑owned structures, risks are often underestimated.
FAQ – Frequently asked questions about D&O insurance in Switzerland
Is D&O insurance mandatory in Switzerland?
No, but it is strongly recommended, especially for administrators and executives with operational responsibilities.
Can past mistakes be covered as well?
Yes, with unlimited retroactivity it is possible to cover wrongful acts committed before the policy was signed, provided they were not known.
Does it also include liability towards employees?
Yes, if extended with an employer liability clause.
Must a SA or Sagl in Ticino include it?
It is not a legal requirement, but it is an essential precautionary measure in the event of disputes with shareholders, authorities or employees.
What happens if I do not have it and I am sued?
You will have to bear the legal costs and compensation payments from your personal assets.
Protect your role, protect your company
In Switzerland and in the Canton of Ticino, the exposure to risk for administrators is real. A wrong decision or a moment of inattention can be very costly — even in terms of reputation.
The D&O policy is the legal and financial shield that allows you to operate with peace of mind, protecting both your personal assets and those of the company.
Do you have an SA or Sagl and would like a free consultation on your situation?
Contact us by completing the form below and discover how to build a customised D&O policy for your company in the Canton of Ticino or in Switzerland.
