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Why directors and officers insurance?
Canada is seeing an increasing number of claims against officers and directors. And to protect this socio-professional category, insurers provide them with multi-risk insurance to cover their personal assets in the event of an incident.
Lawsuits can be taken against private companies or NPOs, hence the need to contact a broker specializing in directors and officers insurance.
Importance of Purchasing Directors and Officers Insurance
Directors or officers of a board of directors may be subject to legal action following a specific bad decision or an unjustified dismissal of an employee. In the event of a breach, the company, the organization and the director or officer may be prosecuted.
About Directors and Officers Insurance Benefits
There are many companies on the insurance market that can offer a variety of contracts and coverage adapted to everyone. But overall, here are the cases requiring coverage by directors and officers insurance:
- Failure to pay source deductions owed to the government by the business or organization.
- Receipt of dividends, while the structure is in a difficult financial situation. A state that can lead to lawsuits by the other shareholders, who are likely to judge that there is a failure in the management of the company’s finances.
- Conflict situation between the different directors.
- Disclosure of information or lack of transparency of the company.
- Poor management of the structure.
- Unjustified dismissal of employees. It should be noted that some insurers may provide a special extension to cover this type of incident.
Regardless of the size of the structure or organization, legal action can take place at any time. Hence the need to get in touch with an insurance broker specializing in directors and officers insurance. This is an opportunity to ensure that the personal assets of the directors are protected in addition to those of the company.
Who needs DO insurance?
Directors and officers insurance is not just for large companies. It is essential for:
- SMEs and startups : Start-ups are often vulnerable to litigation.
- NPOs and charities : Volunteer directors can be held liable.
- High-growth companies : The more a company evolves, the more exposed it is to risk.
- Boards of Directors : Any member of a board can be sued personally.
How much does DO insurance cost?
The price of DO insurance varies depending on several factors:
- Company size and turnover
- Industry (regulated sectors are at higher risk)
- Claims history and legal history
- Amount of coverage chosen
💡 Example : An SME can pay between $1,500 and $5,000 per year for $1 million in coverage. For a large company, the premium can exceed $20,000 annually.
Frequently asked questions
What is Directors and Officers (DO) Insurance?
Directors Officers (DO) insurance protects board members and officers of an organization against personal claims arising from their management decisions. It covers legal fees and potential damages.
Who is protected by a DO policy in Quebec?
This insurance protects directors, officers, board members and senior managers. It applies to publicly traded companies, private corporations, NPOs, co-operatives and associations.
What risks does DO insurance protect against?
It covers claims for breaches of fiduciary duties, mismanagement, breaches of regulations, errors in financial reporting, non-compliance with securities laws or in the management of human resources.
How do I get a D insurance quote in Quebec?
Assur360 puts companies in touch with brokers specializing in management risk insurance. Our experts assess your specific needs and compare the best offers on the market. Free service with no obligation.
What is the cost of DO insurance for an SME in Quebec?
The cost varies depending on the size of the business, its industry, revenue, and claims history. For an SME, premiums can start at around $2,000 to $5,000 per year. Get a personalized quote with Assur360.