Directors & Officers Liability
Enhanced protection for your company’s leaders.
Directors and officers are held to a higher standard than ever before by the public, shareholders, and employees. That means it’s critical to have liability protection for any board member, owner or manager.
Your guide to directors & officers liability.
Directors and officers (D&O) liability insurance is designed to protect individuals who are personally sued for wrongdoing while serving as directors or officers of an organization. It provides coverage for defense costs and any resulting settlements the directors, officers and the organization are required to pay.
Wrongful acts and allegations covered under D&O policies include:
- Errors, misstatement or misleading statements
- Acts of omission or neglect
- Attempted or committed breaches of duty
No two D&O policies are the same. Our experienced advisors will negotiate on your behalf to deliver the ideal terms, conditions and policy structure for you.
Supporting businesses across Canada.
Get your D&O insurance by phone or in person at your nearest branch.
Typical features of D&O policies.
While the coverage and options for D&O policies can vary greatly between insurers there are some common features, including three typical clauses.
Side A Insured Clause
This pays the directors and officers directly for losses that are not compensated by the organization.
Side B Insured Clause
This coverage reimburses the organization for the amounts spent to protect and support its directors and officers.
Side C Insured Clause
This covers the organization for its own losses when it is sued along with the directors and officers.
Why choose Acera Insurance for directors & officers liability?
We’ll guide you through all the intricacies of a D&O policy and help determine exactly what you need.
Decades of Experience
Our advisors bring decades of experience protecting directors and officers of public, private and non-profit organizations of all sizes in all sectors.
Custom Solutions
With access to 100+ insurers and specialty underwriters, we can create a customized solution for your organization and its directors and officers.
National & Global Capabilities
Through our networks and alliances, we bring you support from local insurance and risk management professionals across Canada and the world.
Helpful tips from our advisors.
Our Acera Insurance advisors work directly with you to create custom solutions that protect your operations. Our approach includes identifying, analyzing and evaluating your exposures to make proactive decisions for mitigating or preventing risk.
Answering your most common questions.
What time period does the D&O policy cover?
The policy will cover any claims made and reported to the insurer during the policy period provided there was no prior knowledge of any circumstances that could lead to a claim. Extended reporting options may be available if the policy is not renewed.
Are there geographical restrictions for coverage under a D&O policy?
Most D&O policies provide worldwide coverage, meaning the policy will respond to claims regardless of where in the world they arise. However, organizations may still require local insurance policies depending on where they operate. Certain countries require locally-admitted insurance be purchased and taxes to be paid per local legislation in order for a claim to be paid out within the country.
Who is covered under a D&O policy?
Past, current, and future directors and officers of a company and its subsidiaries.
What are some common allegations that require D&O coverage?
Allegations that are most commonly made and which have to be defended by directors and officers include:
- Acting beyond the scope of their authority
- Giving wrong or unprofessional advice
- Breach of fiduciary duties
- Failure to supervise subordinates or company affairs properly
- Authorizing excessive company spending
- Unauthorized company borrowing
When are these allegations most likely to occur?
These are most likely to occur following:
- Foreign investment (especially in the US)
- Acquisitions or divestitures
- Management buy-outs
- Public offerings
- Reduced dividends
- Mergers
- Waste or mismanagement of corporate assets
- Change in ownership of the company’s share capital
- Liquidation of the company
- Employee dismissal
- Boardroom disputes
- Breach of contract
What do D&O policies exclude?
Common exclusions include:
- Fines and penalties
- Fraud
- Bodily injury or property damage
- Pending or prior litigation
- Illegal remuneration or personal profit
- Claims made by shareholders
- Claims made by directors and officers against other directors and officers
- Nuclear incidents
- Claims covered by other insurance
What happens to the coverage following a merger or acquisition?
Although exact language will vary, there is usually a provision stipulating that if the organization undergoes a merger or acquisition during the policy period, the policy coverage is then limited to wrongful acts that occurred prior to the merger or acquisition date.
D&O run-off coverage can be purchased to protect against claims made after this date.
Aren’t directors and officers covered by their company’s indemnification agreement?
Directors and officers have indemnification agreements with the corporations they serve, but this is of no use if the corporation becomes insolvent. Also, the corporation may not be lawfully permitted to indemnify. Allegations of fraudulent and malicious acts will negate the corporate indemnity.
What are the duties imposed on company directors?
The Canada Business Corporations Act and numerous statutes in each province impose many duties on the company director. Some impose liability without any negligence by the director or officer (i.e. unpaid wages or taxes).
There are further duties established by common law and any breaches that lead to financial loss to the company, shareholders or others can be grounds for legal action. Whether the individual is actually found at fault or not, substantial defense costs can be incurred.
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