Directors and Officers Insurance

Find The Best Directors And Officers Liability Insurance

Is your organization and board of directors protected? If your private, public, or non-profit has a board of directors, you need to protect it. Directors face many threats due to their visibility and the nature of their role. This can lead to claims, lawsuits, and other actions resulting in financial loss.

Directors and officers liability insurance gives you an added layer of protection. At ThinkInsure, our advisors can help you protect your organization and board of directors. We will work with you to compare rates and plans for directors and officers insurance from the top providers in Canada.

What Is Directors And Officers Insurance?

Directors and officers insurance or also called D&O insurance, is a form of liability insurance. It is specifically for board members, directors, and officers. It provides legal defense costs and damages awarded as a result of alleged wrongful acts.

Policies are available for private firms, publicly traded companies, non-profits, and educational institutions.

Why Do I Need Directors And Officers Insurance?

Directors and officers insurance is necessary for a number of important reasons :

You cannot claim ignorance of not being aware as a defense for your actions.
Resignation of parties involved may not be enough.
Your current insurance plans may not be enough protection.

Types Of D&O Insurance

D&O coverage can help organizations manage the costs associated with errors, negligent actions, and liability lawsuits.

There are three main types available to organizations :

Non-Profits

Executives in non-profits share similar roles and responsibilities as other organizations. With fewer resources than corporations, it is important to have D&O insurance to protect organization board members. It helps recruit top talent to work in director and officer roles for your non-profit.

Public Companies

Public companies are open to scrutiny. Now more than even, key decision makers are accountable for their actions.

Directors and officers insurance ensures your organization has access to legal counsel. You have protection if executives or management are found liable of erroneous acts, bylaw violations, and errors. You will have coverage for legal fees and representation, providing your organization with financial protection.

Private Companies

Private companies need coverage too. You may not have the same disclosure as public organizations. But your leaders still have exposure. This includes breach of duty, conflict of interest, and misleading commerce partners, customers, and stakeholders. Company and personal assets of leadership can get protection with this plan.

D&O Insurance Subtypes

You have the option to choose between insurance subtypes, or sides :

Side A : This covers individual directors if the organization cannot cover them.
Side B : This covers the company if they choose to cover directors and officers.
Side C : This covers the company for lawsuits for an act not covered under their current insurance.

What Are Common Directors And Officers Threats and Perils?

Serving as a board member, there is an expectation you will act in good faith. You act in the best interests of the organization. Directors and officers are accountable for their actions. Failure to be diligent, loyal, and obedient to rules could expose organizations to many issues. They include :

Errors and omissions
Breach of duties to shareholders
Wrongful acts and failure to act
Financial losses and misuse of funds
Violations of statutory liabilities set by government laws
Employee discrimination and wrongful dismissal

What Does Director And Officer Insurance Cover?

Directors and officers insurance cover a range or organizational issues :

Breach of contract
Contract disputes
Defamation of character
Copyright infringement and intellectual property theft
Confidentiality breach
Fraud
Other actions by directors leading to lawsuits against the organization

Why Is Directors And Officers Insurance For Non-Profit Board Members Important?

Directors and officers of non-profit organizations have similar exposure to threats as professionals in other organizations. An oversight or mistake could result in damages greater than your net worth. This is a significant risk if you do not have it.

Today, an increasing number of non-profits and those in director positions are being sued for their decisions. Standard insurance will not cover you for legal protection of this nature.

Who Does Board Of Directors Liability Insurance Protect?

Depending on your policy type it will provide protection for :

Your organization
Board members
Directors
Organizational leaders
Management
Other professionals listed

Directors And Officers Insurance Claims Examples

Example 1 : You have to downsize. They eliminate redundant positions. Some of the affected employees started a wrongful dismissal claim against the directors for discrimination.
Example 2 : A builder is in breach of safety laws. A piece of material fell off a structure they were building. They are in violation of a number of health and safety codes. There is legal action against the director who was overseeing the project.
Example 3 : A director sells off an asset for half of its estimated value. They sell to a known acquaintance. Shareholders sue the director for mismanagement of financial assets.

Directors And Officers Insurance FAQs

What Is Included In Directors And Officers Insurance?

Here is what you can expect to be included in your policy :

Plans for past present and future directors and officers.
They are written on a claims-made basis.
It covers monetary damages as a result of lawsuits.
Limits range from $1,000,000 to as high as $25,000,000.
Deductibles can range from $0 to $2,500.
Individual directors can take out a policy.
Full entity coverage for claims made against the company itself.

What Does Directors and Officers Insurance Not Cover?

It does not cover criminal acts, bodily injury, property damage, fraud, illegal compensation, or prior litigation. When choosing a solution, make sure you are aware of exclusions and obtain other protection to mitigate those threats.

What Is The Average Cost Of Director And Officers Insurance Per Year?

The cost of your premium depends on your company size, type, and perceived risk. For example, lower risk businesses can pay as little as $400 per year for $1 million in coverage. Larger enterprises with greater exposure can pay more than $10,000 per year.

As a general rule, premiums increase as organizations become larger and have greater exposure. SMBs are lower risk and publicly traded organizations are higher risk. Getting a quote is the most effective way to determine how much it will cost.

Are There Directors And Officers Coverage Limits?

Yes, all insurance has limits. Limits vary based on your company size, risk factors, and other considerations. Always reassess your limits when you renew each year.

How Much Directors And Officers Insurance Do You Need?

Coverage limits vary based on the size and type of company. The amount you need increases with your exposure, number of employees and other factors. Speak with an insurance expert about your needs and options.

What Is The Difference Between E&O And D&O Insurance?

There is one main difference between D&O and E&O policies. It is the type of actions that are part of your coverage. E&O insurance is for products and services. D&O is for management and leadership decisions.

Get A Directors And Officers Insurance Quote

Our experts can help you with all your insurance needs, including D&O insurance quotes. We will find you the right solution to match your business size, type, and industry. Get the best rates and save while protecting your best interests. Get peace of mind.

We'll make sure you are protected. Call toll-free 1-855-550-5515 or request a quote online.

Get quotes for directors and officers insurance from the top insurers in Canada and save more.