Directors’ and Officers’ liability in the classic motor trade

Why personal risk for owners and directors is rising and how management liability insurance can help

Running a classic motor business is often a labour of love. Many owners are also directors, technicians, restorers, or collectors themselves –deeply involved in every decision. But alongside the pride of building a respected business comes a growing level of personal legal responsibility that many directors underestimate.

In the UK, directors can be held personally liable for a wide range of decisions, even when acting in good faith. Claims do not have to be proven to be costly. The legal cost of defending an allegation alone can be significant, and in some cases, personal assets can be at risk.

Why directors of classic motor businesses are exposed

Classic motor traders, restorers, and collectors often operate as small or medium- sized limited companies, where directors wear multiple hats and make decisions quickly. That combination can increase exposure in areas such as:

• Employment disputes involving technicians, apprentices, or office staff
• Health and safety investigations following incidents in workshops or storage facilities
• Allegations of mismanagement, breach of duty, or insolvency related decisions
• Regulatory investigations by bodies such as HMRC or the Health and Safety Executive
• Disputes with shareholders, partners, or creditors

UK enforcement activity remains active. Between April 2023 and March 2024, 1,222 directors were disqualified¹, with an average disqualification period of 8.4 years, highlighting how seriously regulators view director conduct.

Employment claims are one of the biggest risks

Employment related claims are among the most common triggers for management liability claims, particularly for SMEs. Smaller businesses don’t often have in-house HR or legal support, making it easier for disputes to escalate.

Legal experts note that employment tribunal claims do not need to be successful to be expensive, as directors and businesses still need to fund legal defence costs. Changes to employment law are also increasing scrutiny on directors, with proposals and reforms placing greater personal responsibility on company leadership for compliance failures.

For classic motor businesses employing specialist staff, even a single unfair dismissal or discrimination allegation can result in substantial defence costs, reputational damage and time away from the business.

Insolvency and financial decisions under scrutiny

Economic pressure has increased the focus on directors’ decisions during periods of financial stress. Industry analysis shows that UK insolvencies are now above pre pandemic levels², bringing greater scrutiny to decisions made by directors around trading, payments and creditor treatment.  

In insolvency scenarios, directors can face:

• Claims for wrongful trading
• Investigations into conduct and decision making
• Compensation orders requiring directors to personally repay losses to creditors

These exposures exist even where directors believed they were acting in the best interests of the business.

The management liability gap for SMEs

Despite these risks, many SMEs remain under protected. Market research indicates that only around 40 per cent of UK SMEs hold Directors and Officers cover³, leaving a significant proportion of directors exposed to personal financial risk.

This gap often exists because directors assume that:

• Limited company status fully protects personal assets
• Claims only affect large corporates
• Legal costs are manageable if an issue arises

In reality, directors can be personally named in claims, investigations and proceedings, regardless of company size.

How management liability insurance helps protect directors

Management liability insurance is designed to protect both individual directors and the business itself. Cover typically combines:

1. Directors and Officers liability
2. Employment practices liability
3. Corporate legal liability

For classic motor businesses, this can help cover:

• Legal defence costs for directors and managers
• Employment tribunal claims and investigations
• Regulatory and compliance related actions
• Claims alleging mismanagement or breach of duty
• Protection for the company where it is named alongside directors

Crucially, management liability insurance responds even when allegations are unfounded, ensuring directors are not funding defence costs personally.

A tailored approach for classic motor traders

At Howden, we recognise that classic motor businesses are typically owner‑led, highly specialist, and built on reputation. Management liability insurance isn’t about anticipating problems – it’s about safeguarding the people behind the business, so they can stay focused on doing what they do best.

Just as you insure your vehicles, workshops, and collections, management liability insurance helps protect your leadership, your livelihood, and your future.

To find out more about Directors and Officers cover,  and management liability insurance for classic motor businesses, speak to the Howden Classic Motor Trade team.

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Sources:

1. Director Disqualification Guide 2026
2. Directors and Officers Insurance Insights 2024
3. UK Directors' & Officers' Insurance Market 2024