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What is Directors & Officers Insurance?

Directors’ and Officers’ Insurance, also known as D&O insurance or professional liability, is designed to protect organizations from Derivative Lawsuits, Non-Derivative Lawsuits, and associated legal expenses. Coverage is available for both for profit and not-for profit organizations. Directors and Officers have a personal stake in ensuring that the corporation they serve adheres and operated within the law, regulations and statutes that govern corporate behaviour. Failure to provide adequate corporate stewardship can lead to personal liability exposures for the directors and officers. Forming a limited liability corporation does not grant immunity to directors and officers from certain liability exposures. In Canada, there are over 150 statutes that contain specific liability provisions for directors and officers if the corporation, under their direction, contravenes these statutes. In Canada and the USA, corporate laws and statutes have built-in penalties and strict liability provisions for directors and officers. These laws were created specifically to pierce the corporate veil, to provide accountability to the directors’ and officers’ of the organization, and incentive for fair corporate governance.

Finding the right D&O insurance coverage requires the assistance of a broker with knowledge and experience in this class of insurance.

At AC&D Insurance we employ professional brokers that have extensive knowledge in the field of D&O insurance. The limits and types of D&O insurance needed for each type of business are different and we will work with you to find the right coverage package.

What does D&O Insurance Cover?

The main components of standard D&O Insurance policies are:

  • Side A
  • Coverage for defense expense and payments that arise from claims against Directors and/or Officers when the costs cannot be indemnified by the company.
  • Side B
  • Company reimbursement coverage. This coverage reimburses the company for the costs of paying claims made against the Directors and/or Officers.
  • Side C
  • Provides coverage for claims when the company itself is a defendant in the claim.
  • For publicly traded companies, it typically only provides cover for securities related claims. However, in some cases additional coverage is available.

Additional D&O Insurance Considerations include:

  • Public Policy Exclusions
  • Conduct (Fraud & Dishonesty)
  • Fines and Penalties
  • Underwriting Exclusions
  • Major Shareholder Exclusion
  • Insured vs. Insured Exclusion
  • Pending and Prior Litigation Exclusion
  • Securities Claims Exclusions
  • Employment Practices Liability
  • Contractual Liability
  • Additional Clauses
  • Cancellation of Policy. Restricts the ability of the insurer to cancel the policy mid-term
  • Hammer Clause
  • Entity Security Coverage
  • Priority of Payments
  • Spousal Liability
  • Extended Reporting Period
  • Pollution Extension
  • Employees as Co-Defendent Coverage
  • Non-Rescindable Side A Coverage
  • Defense Costs Allocation

Still undecided about whether to purchase D&O Insurance?

  • FACT: The average indemnity payment on closed claims in Canada is $564,000
  • FACT: The average defence costs paid on closed claims in Canada is: $602,000*

*figures from 2011 survey.

Why do I need D&O Insurance?

Directors and officers of every organization have a fiduciary duty to their stakeholders to prevent the erosion of corporate assets; hence, it is in their best interest to transfer the risk of exposure of indemnification to an insurance company that specializes in these matters.

How much does D&O Insurance cost?

The cost of D&O insurance differs based on the size/scope of your operation and limits of coverage selected. D&O liability policies can start as low as $350 for non-profit entities. Contact us today to arrange a no-obligation review of your D&O Insurance needs from one of our expert brokers.



Complete as much of this form as you like. If you would prefer to have an application sent by email or speak with a qualified broker directly, please complete the contact information sections only and click submit at the bottom of the form.

Is the Applicant a Financial Institution?:
Is the Applicant involved in handling or training using firearms, explosives, dangerous chemicals or weapons?:
Which of the following best describes the Applicant's legal status?:
Private Company means a company that by its special Act, letters patent or supplementary letters patent: - has restricted rights to transfer its shares - that prohibits any invitation to the public to subscribe for its shares or securities.
Has the Applicant been in operation for at least 12 months?:
Is the Applicant in arrears in its amounts payable on any federal or provincial government taxes?:
Does the Applicant have any of the following in the USA: Premises/Operations? Subsidiaries? Employees?:
Does the Applicant provide a pension plan to their employees?:
Is the Applicant a Condominium Corporation or Strata Corporation?:
Has there been a management buy-in (MBI) or buy-out (MBO) within the last two years?:
*Answer Required for Private Companies Only
Has the Applicant incurred a pre-tax loss or negative net worth (share capital plus reserves) in any of its last two complete financial years or is a pre-tax loss or negative net worth anticipated in its current financial year?:
*Answer Required for Private Companies Only
Is the Applicant and its subsidiaries insolvent or unable to meet their financial obligations as they fall due (including debt covenants or statutory obligations for taxes, pensions, benefits and wages)?:
*Answer Required for Private Companies Only
Is the Applicant a Franchisor?:
*Answer Required for Private Companies Only
Are at least 80% of the shares of the Applicant owned by their Directors, Officers or Employees or members of their families?:
*Answer Required for Private Companies Only
A standard policy provides cover for employment claims brought against the individual directors and officers of the Applicant. Do you require a quotation to include cover for employment claims made against the entity itself?:
*Answer Required for Private Companies Only
Has the Applicant had any claims which would fall within the proposed insurance coverage within the last 5 years?:
*Answer Required for Private Companies Only
Has any director, manager, partner or trustee of the Applicant or any person insured or proposed for insurance (i) been convicted, or charged but not yet tried, of any criminal offence other than a motoring offence? or (ii) been declared bankrupt, gone into insolvent liquidation, or been the subject of receivership or an administration order?:
*Answer Required for Private Companies Only
Is the Applicant aware of any fact or circumstance which could give rise to a claim against the Applicant or any of their present or former directors, managers, partner or trustees?:
*Answer Required for Private Companies Only
To the knowledge of any director, manager, partner or trustee of the Applicant, has any company declined or terminated the insurance for the Applicant, any present director, manager, partner, trustee or for any predecessor in the business, past directors, managers, partners or trustees?:
*Answer Required for Private Companies Only
By submitting this application you declare that the above statements and particulars are true and that you have not suppressed or misstated any material facts, and that you agree that this declaration shall be the basis of any binder or contract of insurance with the Insurer, and that the limits and deductibles as stated in the said binder or contract of insurance shall govern. It is understood and agreed that the completion of this application does not bind the Insurer to the issue of the insurance nor the Applicant to the purchase of the insurance. It is further understood and agreed that if, following submission of this application to the Insurer and prior to the date requested for coverage to be effective, the Applicant becomes aware of any information which has a bearing with regards to this application, the Insurer shall be immediately notified in writing of such information. Note: The policy does not cover any claim or circumstance stated above or any act, error, omission or circumstance which could give rise to a claim, of which the Applicant has knowledge prior to the inception of the policy.:
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