Management decisions can lead to personal and organizational claims
Directors and officers supervise and manage an organization under duties imposed by corporate and other laws. Claims can allege breach of duty, misrepresentation, conflict of interest, misuse of funds, employment-related decisions or other wrongful acts. Even an allegation that is ultimately unsuccessful can require a defence.
Directors and officers liability insurance—often called D&O—can address covered claims against individual directors and officers and, depending on the form, the organization itself. It does not remove legal duties or protect every act.
Understand the sides of the policy
A D&O program may include:
- Protection for individuals when the organization cannot indemnify them
- Reimbursement to the organization when it lawfully indemnifies an insured person
- Entity coverage for specified claims against the organization
- Employment practices or fiduciary extensions, if expressly included
- Investigation or crisis expenses under defined circumstances
Coverage differs for private companies, public companies, non-profits, charities and condominium corporations. Fraud, deliberate illegal conduct, prior matters, bodily injury, property damage and insured-versus-insured claims may be excluded or limited, with wording-specific exceptions.
Claims-made continuity matters
D&O is commonly written on a claims-made basis. The retroactive or prior-acts position, continuity date, pending-and-prior-litigation date and reporting provisions can determine whether a later claim is covered. A merger, acquisition, sale, dissolution or policy replacement may require runoff or extended reporting arrangements.
Do not let a new quote be evaluated on premium and limit alone. Compare definitions, exclusions, defence provisions, allocation, severability and knowledge wording. Report circumstances that could become a claim in the manner and time required by the policy.
Governance information shapes underwriting
Prepare current financial statements, ownership and board structure, bylaws, fundraising details, subsidiaries, prior claims and known disputes. Insurers may also ask about employment practices, debt, insolvency concerns, regulatory matters and internal controls.
Corporations Canada notes that directors and officers have duties of care and must remain informed. Ontario’s not-for-profit guidance similarly describes statutory duties and permitted indemnification. Good minutes, conflict procedures, financial oversight and access to professional advice support governance but are not substitutes for coverage.
Protect the role and the organization together
Contact Westoak to review the entity type, indemnification arrangements, board exposures and available D&O terms alongside commercial general liability and cyber coverage.