Directors and Officers Insurance in Ontario – An Introduction
As Canada’s most populated province, Ontario is home to some of the world’s foremost leaders in manufacturing, financial services, technology and energy production working alongside thousands of small- and medium-sized businesses.
With Ontario’s wealth of natural resources and its sizable market and talent pool, it’s no wonder the province produces and attracts multinational corporations that make considerable contributions to the world’s economy.
The decisions made by the leaders of these public, private and non-profit organizations, across all industries and of all sizes, have an impact on the lives of a significant number of people in Ontario and elsewhere. Therefore the criteria for those who fill the roles of directors and officers of any company are understandably stringent. But as we’ve seen, no company is immune to mistakes made by any individual or team of people.
The difference is the magnitude of the decisions made by those at the top means they face scrutiny and risk unlike employees in any other position. For that reason, companies have been purchasing directors and officers insurance policies to attract and protect decision-makers and give them the peace of mind to make crucial business decisions.
What is Directors and Officers Insurance?
While commercial general liability insurance (CGL) covers physical harm to persons or property caused by a business, Directors and Officers (D&O) insurance covers decisions made by executives that may be considered a “wrongful act”, which can include:
- Decisions made or not made that lead to financial losses
- Failure to comply with statutes and regulations (does not apply to intentional criminal acts)
- Misleading statements
- Breach of duty
It is important to note that neither ignorance nor resignation will protect against wrongful acts for which a director or officer is liable.
In today’s litigious landscape, the risks associated with occupying a director’s or officer’s position are vast and include personal liability. The need for specific directors and officers insurance is imperative as they are answerable to shareholders, government enforcement agencies, and the general public, and anyone of them can bring an action or trigger a costly investigation.
What does Directors and Officers Insurance Cover?
Directors and officers insurance policies and generally purchased by the corporation as a way to attract and retain executives by providing a sense of security needed to make complex decisions without the added stress of a multi-million dollar lawsuit hanging over their heads. That’s not to say that a D&O insurance policy is protection against reckless or illegal action, but it does provide relief from worry over legal costs for those diligently acting in good faith.
Directors and Officers liability policies generally provide these basic coverages:
- Legal defence costs including costs stemming from an investigation
- Settlements reached and damages awarded from lawsuits
- Financial losses sustained by shareholders due to a wrongful act
- Mistakes and/or misrepresentations made by previous, present and future directors and officers
Who Uses Directors and Officers Insurance?
Ontario directors and officers liability insurance is available to both public and private companies and to non-profit organizations as none of their executives are exempt from the risks associated with that high a degree of responsibility.
Why Choose Aligned?
Our ALIGNED Advocates understand the complexities and risks inherent in high profile directors’ and officers’ positions and have worked with countless organizations in Ontario over the years to ensure that their leaders are protected.
Call ALIGNED Insurance today for all your Directors and Officers Insurance needs.