Directors And Officers Insurance Ontario

Ontario Directors And Officers Insurance Coverage 

Any company that grows large enough will eventually require some directors and officers within its corporate structure. While a company owner can make all the critical decisions in a small company, once it becomes a more complex business, this can no longer work. Maybe it needs people who can cover the owner's blind spots. Perhaps the problem is with the sheer number of decisions. Sometimes, it's a combination of both. Regardless of the reason, the company needs people to make difficult decisions. These decisions, however, could have massive legal repercussions, and directors and officers insurance is the best way to shield the company from the consequences of an incorrect action.

What Is Directors And Officers Insurance? 

Directors and officers insurance (also known as D&O Insurance) is a form of business insurance that provides coverage for company executives and directors against wrongful acts up to the coverage limits. It covers your highest-ranking employees, such as your board of directors. These wrongful acts might include actual or alleged errors, omissions, misleading statements, and neglect or breach of duty on the part of a board of directors member. 

The D&O insurance policy will provide the resources and expertise to defend the board and individual members against the allegation. Defence costs are sometimes included as part of the overall policy limit, in addition to protecting against fees and fines one could face, so knowing the total limit is essential. Note that this protection is provided whether the individual director in question is being sued or the company is the one under fire.

Who Needs Directors And Officers Insurance? 

All non-profit and private companies should have directors and officers insurance if they have a board of directors to protect their board members, directors, and officers from financial losses. It might not seem like directors and officers face many liability risks, but this practice faces a deceptive amount of risk. The laws that companies must follow regarding taxes, payments, treatment of employees, for-profit motif for shareholders, duties to clients, and more can be very strict. Furthermore, breaking these laws has very harsh penalties for the company to face, even if only a single mistake is made. Often, D&O insurance is the only line of defence a company has after a mistake is made, meaning that it is recommended for any business with people in such positions, regardless of size. Individual board members can be held personally liable for their actions while acting on a board of directors.  To keep them protected they need to have D&O insurance.  

Is Directors And Officers Insurance Mandatory In Ontario? 

Although directors and officers insurance is not legally mandatory in Ontario, it is recommended for every company in Ontario that has people in these positions. This recommendation is due to the vast number of perils faced by directors and officers in their positions. Also, many of the most talented people in the industry won't work for companies that do not protect their top employees with D&O coverage since this protection gives them peace of mind that they will be financially safe. A company which also does not protect itself with directors and officers insurance is very vulnerable to lawsuits and other dangers, potentially costing it massive amounts of money and disrupting the business.

What Does Directors And Officers Insurance Cover? 

Directors and officers insurance covers many risks company executives face. These risks include employee accusations, decisions impacting shareholders, breach of duty, and errors in government-related paperwork. Below are some common examples of how D&O insurance can help a company or an executive.

Mistreatment Of Current And Former Employees 

As your employees are the lifeblood of a company, we know you will treat them with respect. Directors and officers insurance can protect the company if someone on your board slips up.

Decisions That Negatively Impact Shareholders 

One of your executives might make a miscalculation that causes losses for shareholders, giving them legal grounds to pursue your company. Directors and officers insurance gives you financial protection if this happens.

Breach Of Duty 

Many companies have fiduciary duties, meaning they must act in the client's best interest.   If Someone in your organization slips up, D&O insurance will protect you financially.

Errors In Government And Tax Paperwork 

While nobody likes dealing with the paperwork that comes with being a corporation, it does need to be done. If a mistake is made, directors and officers insurance ensures your finances remain well taken care of.

What Does Directors And Officers Insurance Not Cover In Ontario? 

Although there are many times when directors and officers insurance protects you, it doesn’t cover everything. Some of the times that D&O insurance won't cover a loss are below. 

Illegal Acts 

If you purposefully mistreat employees, or falsify documents, D&O insurance won’t cover you. 

Intentional Mismanagement 

Intentionally circumventing your fiduciary duties to your shareholders will not be covered by directors and officers insurance.  

Acts Committed For Personal Gain 

High-ranking employees have the power to make critical decisions. To get the benefits of D&O insurance, they must choose the option that will benefit the employer, and not themselves. 

Does Ontario Directors And Officers Insurance Cover Non-Profits? 

Yes. Directors and officers insurance can be applied to a non-profit insurance policy. It is often recommended that non-profits do their best to protect their board members, as many of them are volunteers and will likely be hesitant to take on the responsibilities involved in being a board member if they are open to the massive risks involved with not having D&O insurance. If you would like to know about how your directors and officers insurance is impacted by your organization being a non-profit, it is best that you speak with your Morison Insurance broker, who will be happy to help you. 

Does Directors And Officers Insurance Cover Former Directors? 

Yes, D&O insurance can cover past directors and officers. As long as said members were protected by directors and officers insurance while on your board, they will remain protected for actions they took while performing their duties as long as your company retains its D&O insurance policy. 

How Much Does Ontario Directors And Officers Insurance Cost? 

There is no set cost to a directors and officers insurance quote. This is because no two businesses are the same, so no two D&O insurance policies will face the same risks. Additionally, someone who shops around for directors and officers insurance will likely get a different quote from each insurance company. This is because each insurance provider will weigh each risk factor differently, although it is still common for each quote to be around the same ballpark. If you want a directors and officers insurance quote, your Morison Insurance broker will gladly help you. 

What Could Impact The Cost Of Directors And Officers Insurance? 

Plenty of factors could impact a directors and officers insurance quote. Most of these factors are related to the level of risk the board is open to. Many of the factors that could potentially impact the cost of directors and officers insurance are as follows: 

• The number of people on the board of directors and officers being covered by the policy. 

• The level of experience of the members of the board. 

• The insurance history of all members of the board. 

• The insurance history of the policyholder and the company as a whole. 

• The level of coverage requested by the policyholder. 

• The size of the deductible. 

• Any risk management steps the company, policyholder, or board takes to lower the risks involved. 

• The industry that the company is in and any risks inherent in that industry. 

• The size of the company and annual revenues. 

Please note that this is not an all-encompassing list of what could impact a D&O insurance quote. If you would like to know more about possible factors and how to lower your insurance costs, your Morison Insurance broker will be happy to tell you. 

Where Can I Get A Directors And Officers Insurance Quote? 

You can get a directors and officers insurance quote from Morison Insurance. Morison Insurance is a family-owned and operated insurance brokerage that treats our clients like an extension of that family. Our insurance professionals have been serving the people of Ontario for over a century, getting them the best insurance coverage available. If you want the best possible D&O insurance quote or any other commercial insurance, call us at 1-800-463-8074 or fill out the form on this page to get the insurance coverage you deserve.