Directors & Officers Liability Insurance in Ontario
Liability insurance for Ontario’s directors and officers
Ontario’s directors and officers play a key role in business decisions that impact the interests of everyone involved, from the clients to employees and relevant stakeholders. In our modern business landscape, they have a duty to appropriately exercise due diligence when overseeing the management of the organization or community that they serve.
In short, directors and officers are always expected to act in good faith, and always in the best interest of the company. Unfortunately, due to the impact of the decisions that they make, shareholders, stakeholders, and other parties may suffer losses if an error of judgement is made and can bring lawsuits alleging wrongdoing or liability. In these lawsuits, they will often name directors and officers personally, rather than the entity itself
Directors and officers liability insurance, also referred to as D&O insurance, is coverage that is payable to the directors and officers of a company, or to the organization itself as indemnification or reimbursement for losses and provides protection for the personal assets of the directors and officers..
Acera Insurance offers comprehensive directors and officers liability insurance quote in Ontario for boards that provide oversight for leadership, succession planning, risk management and strategy decisions. The goal of corporate governance has been to increase shareholder value. It is imperative that the board looks forward and guides the course for growth while also being aware of the risks. One way to manage these risks is through the correct insurance package.
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Ontario directors and officers liability coverage explained
The directors and officers of a corporation or non-profit organization may find themselves faced with legal action for alleged wrongful acts with the performance of their duties as directors and officers. Acera Insurance offers various directors and officers liability insurance packages to protect you and your company from these types of claims. Learn more about this valuable coverage below.
What is directors and officers insurance?
Directors and officers liability insurance is a form of business insurance that protects companies financially if a director or officer is found legally responsible for their actions, such as employee malpractice or failure to report an error. You can protect your business’s financial future by purchasing directors and officers liability insurance, regardless of whether you work in the public, private, or non-profit sectors. Directors and officers liability insurance in Ontario is one aspect of a comprehensive risk management plan for professionals.
The basic duties of directors and officers of a business are typically as follows:
- Duty of diligence: Being reasonable, acting in good faith, and serving the best interests of the organization.
- Duty of loyalty: Put the interests of the organization above your own.
- The obligation of obedience: Act within the limits of applicable bylaws.
Why get directors and officers insurance in Ontario?
The world of large business is a constant battle for control. Being a director or officer in a position of authority at the head of an organization or company is a duty that requires diligence and attention to detail. One mistake or poor decision could mean that they end up doing damage to their company’s reputation.
Lawyers often find them in hot water, whether they are held accountable for an issue their company has caused or their negligence resulted in serious financial, bodily, or criminal harm.
Shareholders hold directors of public companies responsible for financial losses or deficient performance. This is the most common claim against them.
Get a Directors and officers liability insurance quote to protect you against financial loss and reputational damage in the event of a claim.
How does directors and officers Insurance in Ontario Work?
The directors and officers liability insurance policy has three types of agreements. It covers:
- The corporation and organization in the event of a suit.
- Individual directors or officers coverage when the corporate bylaws provide for indemnification.
- Coverage for each director and officer when no indemnification is available from the corporation.
Limits may include legal expenses or a deductible.
The policy is written on a “claims made” basis. This means that any claim that could have occurred during the policy term that will be replaced by the next renewal must be reported. The best rule of thumb is to notify your insurance professional if you know of anything that could lead to a claim against the corporation, directors or officers.
We offer D&O insurance Ontario leaders and businesses can depend on
We’ve used our extensive experience and knowledge to create support the following industries with their commercial general liability insurance and more specialized coverage:
It is a common belief that only large corporations require directors and officers insurance. This, however, is a misconception. Small businesses and privately owned companies are not immune from costly claims simply because they have fewer shareholders.
If they do not have the resources or preparation, small business owners could face an even greater financial burden from a suit against their directors and officers than any large corporation.
Consider adding directors and officers liability insurance to your commercial insurance policy if you have a corporate board or advisory committee.
To be sued for managerial action, you do not have to be the most renowned organization on the planet or need to be making millions. This applies to businesses of all types, including those in the private and non-profit sectors.
You can talk to one of our brokers if you are not sure if you need directors and officers insurance. Acera Insurance works with large and small companies across Canada and offers the best directors and officers insurance in Ontario. We also offer one of Canada’s only virtual, online portals through which you can get a quick, free quote in Ontario, and obtain your own directors and officers insurance.
Key Ontario D&O coverages for your business
Directors and officers liability insurance is split into three clauses. Each of these different clauses defines how your policy will act upon a claim being made, and what entity or body it will cover.
Liability for directors and officers
Directors and officers can be held personally responsible if the business fails to pay the damages. This coverage protects directors and officers when a claim is made personally against them, and not the business.
If a company files for bankruptcy, it could still hold the directors and officers responsible to pay the disgruntled parties. These policies can be used to pay lost wages, cover legal fees, and protect personal assets.
Company reimbursement
These policies protect your business assets. It also pays for legal fees incurred when officers and directors are held responsible. Your insurer may also reimburse your corporation for expenses incurred in defending your directors and officers if employees sue you or your management team.
Entities coverage
These policies provide additional protection for the corporate entity by extending the directors and officers insurance.
How much does directors and officers insurance in Ontario cost?
The risks and exposures that impact the cost of directors and officers liability insurance coverage can vary across businesses.
These factors can impact the cost of directors and officers insurance in Ontario:
Business industry
The type of business you run will affect your risk level. Your premium for directors’ and officers liability insurance in Ontario will be lower for small businesses. Due to the increased risk of a lawsuit, high-stake companies, such as public corporations with many managers, will pay more each month for directors and officers insurance.
Employees
Your directors and officers insurance policy may cost you more than if your company were larger. There are greater chances that a mistake will be made if you have more employees.
Any member of your advisory committee or board could report an error or breach of their fiduciary duty, which can lead to a costly claim for your insurance company.
Experience
Your directors and officers liability insurance may cost less if you have more experience in your field. You can prove to insurers that you are competent and capable of doing your job without any problems. You may pay higher premiums if you do not have any job experience, since inexperience is often equated with a higher risk for loss.
Financial position and revenue
High revenues will usually increase your directors and officers liability insurance costs. Third parties such as employees and investors can request more compensation if the company’s revenue is stable. On the other hand, some insurance companies may lower your premium if you have a strong financial foundation, which means that your chances of going bankrupt are lower.
History of business insurance
The directors and officers liability insurance cost will be influenced by your business history. Insurers will offer lower prices if your business has a clean history with few claims. However, having multiple claims in the past can raise your premium because it indicates that you are likely to make another.
Benefits of working with Acera Insurance
For directors and officers liability insurance Ontario professionals can count on Acera Insurance. Our team will work closely with you to ensure you have the right type of liability protection. Those working in a professional capacity often need a higher level of liability insurance to protect against common risks including lawsuits filed against them. With the increasing number of claims against professionals, it is more important than ever to obtain the right directors and officers insurance Ontario companies and professionals need to have.
When it comes to directors and officers insurance, Ontario companies must select customized insurance that meets their individual needs. This type of insurance helps to protect corporations and non-profit organizations from claims made against them including claims of wrongful acts in regards to the performance of a director or officer in the company. The claims can be numerous and may not be legitimate. However, defending against these claims can be financially difficult. With the right directors and officers insurance policy, risks can be minimized.
These types of claims are typically made by shareholders, employees or clients. And allegations can range from mismanagement and fraud to non-compliance of local or federal law. Employment practices liability insurance can be purchased in connection with directors and officers liability to address a variety of other employee allegations, such as discrimination, sexual harassment, wrongful dismissal and retaliation.
When you contact Acera Insurance for a directors and officers liability insurance quote, Ontario business owners and managers get exceptional service from a dedicated team of professionals.
Ontario Directors and Officers Liability Insurance FAQs
Professional liability insurance protects your employees from being held responsible for their actions and advice. It can pay for legal fees and damages if, for example, a technology consultant created an app that did not perform as expected.
Directors and officers liability insurance, on the other hand, protects high-ranking employees of organizations in case they are held personally liable for their actions including negligence, mismanagement, and others. Directors and officers liability insurance is considered a type of professional liability insurance.
Typically, yes, most insurers offer directors and officers coverage to cover former high-ranking employees. If a director left your company months ago but there is a recent lawsuit against them, your business insurance should cover the costs and damages.
Federal and provincial statutes a director or officer may be liable under are as follows:
- Income Tax Act
- Employment Standards Act
- Bankruptcy Act
- Pension Benefits Act
- Competitions Act
- Unemployment Insurance Act
- Discrimination Act
Directors and officers liability insurance does not cover intentional illegal acts such as fraud, embezzlement, or decisions made to gain personal profit.
Directors and officers liability insurance also does not cover bodily injury or property damage. You will need a commercial general liability insurance policy for that.
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