Get a quote

×

Join Our Distribution List Today!



×
ALIGNED Insurance

Call Toll Free
1-866-287-0448

D&O Insurance Explained

D&O insurance
Click here to get an insurance quote now - ALIGNED Insurance Brokers
Commercial insurance quote? Click HERE to get a quote now!

D&O Insurance aka Directors and Officers Insurance Explained

Directors and officers(D&O) insurance is a type of liability insurance covering directors and officers for claims made against them while serving on a board of directors and/or as an officer. D&O insurance can be written to cover the directors and officers of publicly traded companies, privately held firms, not-for-profit organizations, and educational institutions. In effect, the policies function as “management errors and omissions liability insurance,” covering claims resulting from managerial decisions that have adverse financial consequences.

D&O Insurance policies can contain “shrinking limits” provisions, meaning that defense costs—which are often a substantial part of a claim—reduce the policy’s limits. This approach contrasts with commercial general liability (CGL) policies, in which defense are typically covered in addition to policy limits. However, some D&O insurance products do provide defence costs in addition to the limit on an unlimited basis or could provide a special sublimit that is “in addition to the policy limit” that is specifically for defence costs.

Other distinctive features of D&O insurance policies are that they:

  1. Are written on a claims-made basis
  2. Usually contain no explicit duty to defend the insureds (when covering for-profit businesses)
  3. Cover monetary damages but exclude bodily injury (BI) and property damage (PD)
 

What Some Examples Of Canadian Directors and Officers Insurance Claims?

Real Canadian Directors and Officers Insurance Company Claim:

An employee of a small, Canadian private business convinced the board of directors that he was qualified to step into the role of president of the company and he was appointed. Under his leadership the company’s financial position substantially weakened. On behalf of the company, a shareholder sued the board of directors alleging that it used poor judgment and did not act in the best interest of the company when it appointed the new President. The case eventually settled for $1,500,000 million plus legal fees of $300,000 resulted in a $1,800,000 loss paid by the insurance company.

See also Claims-made coverage trigger; Duty to defend; Nonprofit directors and officers liability insurance; Shrinking limits defense provision.

Whether your organization is publicly traded or a small private company D&O insurance should be considered to help protect the management/leadership team. To learn more speak to an ALIGNED Insurance Advocate or connect with us at www.alignedinsuranceinc.com

It’s time to get your insurance aligned. Want Canadian business insurance that’s ALIGNED with your bottom line? We can help. 365. Call us toll-free at 1-866-287-0448.

We’re ALIGNED across Canada. The ALIGNED Insurance National Operations Centre in Cambridge, Ontario supports our Toronto, Calgary and Vancouver offices. We’re proud our industry peers consistently recognize ALIGNED Insurance as one of the best insurance teams in the country. We are also very proud to be one of the fastest growing insurance brokerages in Canada.

We deliver e-news you can use. Get practical business insurance insights in your inbox. 12,000+ people subscribe to our free ALIGNMENT Matters e-news. Just click the JOIN OUR DISTRIBUTION LIST button – at the bottom of our homepage – to connect and learn more about us.

365 | Get ALIGNED. Every day, Canadian business leaders follow our insurance insights via @ALIGNEDonRisk, on FacebookLinkedIn and watch our YouTube videos here!

Leave a Reply

Your email address will not be published. Required fields are marked *

CLICK HERE TO GET A COMMERCIAL INSURANCE QUOTE NOW