Directors and officers insurance

At a glance: The world is becoming increasingly litigious – now, more than ever directors and officers are being sued for the decisions and actions that they make, or fail to make while performing their managerial duties. Directors and officers’ insurance can fill this gap of insurance coverage, and provide peace of mind against this increasing trend.

What is D&O insurance?

Think the personal assets of your directors and officers are untouchable in the event of a D&O liability claim? Well, think again.

Directors and officers insurance protects the assets of a company’s directors and officers when they are sued for actual or alleged wrongdoings while performing their managerial duties. This insurance can also protect the company by covering costs such as expensive legal fees, and awarded settlements associated with these lawsuits.

Who needs D&O insurance?

The better question to ask is who doesn’t? A common misconception is that directors and officers insurance is coverage required for publicly traded companies only, but that is not the case. Whether your company is public, private, or non-profit – the decisions made, or not made by directors and officers are increasingly resulting in lawsuits.

Directors and officers insurance can help defend against these lawsuits and protect your organization’s assets, and the personal assets of its directors and officers

Call today to see how our brokers can help.

Who brings claims against directors and officers?

When stakeholders feel that they have been wronged by the decisions made by an organization’s directors and officers, they may bring a directors and officers claim against them. These people can include:

  • Employees
  • Volunteers
  • Clients
  • Suppliers
  • Contractors
  • Creditors
  • Shareholders
  • Regulatory Bodies
  • Government

What are some common claims brought against directors and officers?

Some common reasons for D&O insurance claims include:

  • Wrongful Termination
  • Breach of contract
  • Contract disputes
  • Misappropriation of funds
  • Fraud
  • Breach of Fiduciary Duty
  • Copyright and/ or patent infringement
  • Poor employment conditions
  • Discrimination
  • Conflicts of interest

Good to know: Common questions about D&O insurance:

Different businesses have different insurance needs, and D&O insurance is no exception. Some companies may have a higher exposure to D&O liability than others and must choose an adequate limit of insurance to cover said exposure. Your best bet is to contact one of our experienced insurance brokers – they will perform a detailed risk management assessment of your business, and help you determine the limit of insurance that will provide the protection you need!

Just like for-profit companies, directors and officers of non-profit organizations are at risk of being sued for the decisions and actions made while managing the organization. These lawsuits can range from employment-related issues to allegations of mismanaging donated funds. D&O insurance can protect the directors and officers by paying the high defence costs that come with fighting these lawsuits and the possible damages awarded by the courts.

Here are some real world examples of situations that may cause a D&O claim to

  • A high ranking employee, left his organization to start a company of their own. They soon start selling a similar product and take a large share of the market from their former employee. This results in a lawsuit for theft of intellectual property and client lists.
  • An arcade was sold to a new buyer. After the sale the directors and officers were sued by the new buyer claiming that the profitability of the business was exaggerated to lock in the sale.
  • A senior level employee has been accused of harassment by multiple employees and after an investigation his employment was terminated. The employee sued the organization and its directors and officers claiming wrongful termination.

For more examples of potential claim situations, and how D&O insurance can protect against them give one of our brokers a call at 1-800-731-2228

Your business is unique, so are your insurance options.

Being a brokerage for over 70 of Canada’s top insurers means we have access to a wide range of insurance solutions as unique as your business – at some of the best rates in Ontario. Want to learn more about the coverage options available to you? Here’s a few of them.