Directors and Officers Liability Insurance

Directors and officers liability insurance, often called D&O insurance, helps protect an organization’s directors and officers when they are personally named in a claim alleging a wrongful act in the course of their duties. Depending on the policy, coverage may also extend to the organization itself.

Even an unfounded allegation can be expensive to defend. A D&O policy may respond to eligible legal defence costs, settlements and court awards, subject to the policy terms, limits, deductible and exclusions. BIIS arranges D&O insurance for corporations, non-profit organizations and professional associations in British Columbia, Alberta and Ontario.

D&O insurance at a glance

• Protection for eligible claims alleging a wrongful act by a director or officer
• Legal defence costs for covered claims, including allegations that may be groundless
• Potential coverage for settlements or judgments, subject to policy terms
• Coverage options for private companies, non-profits and professional associations
• Employment practices liability may be available for claims such as wrongful dismissal, discrimination or harassment
• Claims-made coverage that requires careful attention to reporting dates and continuous protection

What does D&O insurance cover?

Coverage depends on the insurer and policy wording. In general, a D&O policy may respond when a director, officer or the organization is accused of a wrongful act arising from leadership, governance or management decisions. Common allegations include:

• Breach of duty or breach of fiduciary duty
• Negligence, mismanagement or failure to supervise
• Breach of bylaws or abuse of authority
• Defamation or interference with economic interests
• Governance, membership, licensing or regulatory disputes
• Employment-related allegations when employment practices liability coverage is included

D&O insurance does not cover every business risk. Intentional or criminal acts, known circumstances, bodily injury, physical property damage, professional service errors and cyber incidents may be excluded or require separate coverage. BIIS can help compare the wording, limits, sublimits and exclusions before you decide.

Non-profit D&O claims in numbers

Victor Insurance’s 2026 analysis of D&O claims involving non-profit organizations shows how quickly leadership disputes can become costly:

• $49,000: average claim cost, including defence costs and indemnity
• 1.47 years: average claim duration
• 36%: of claims were brought by employees
• 26%: were brought by non-profit members
• 38%: of allegations involved wrongful dismissal
• 20%: involved discrimination or harassment

Source: Victor Insurance Managers Inc., Risk analysis charts, 2026. These portfolio figures are historical and do not predict the cost or outcome of any future claim.

Non-profit D&O claim examples

The following examples are adapted from Victor’s 2026 non-profit claims booklet. They are illustrative only; whether a policy responds depends on the facts and policy wording.

Wrongful dismissal and defamation

A non-profit terminated a long-serving employee during a reorganization. The employee alleged wrongful dismissal and claimed that a written communication containing damaging statements had been circulated beyond the board. The organization had to respond to both employment and reputational allegations.

Workplace harassment and investigation

Employees complained that an executive director had created a toxic workplace. After an internal investigation, the executive director was terminated and challenged the process. The organization then faced several employee complaints as well as a wrongful termination lawsuit.

Breach of bylaws

A sports club expelled a member following repeated disruptive conduct. The member sued the club and its directors, alleging that the board had not followed the club’s bylaws. Even when a board believes its decision is justified, the process it follows can become the focus of a claim.

Breach of trust and financial oversight

Funds intended to repay a temporary operating loan were mistakenly deposited into a non-profit’s general account and spent on operating expenses. When the organization later became insolvent, its directors were sued for alleged breach of trust and failure to supervise.

Bankruptcy and mismanagement

After a non-profit filed for bankruptcy, creditors and stakeholders alleged that its directors and officers had mismanaged the organization and breached their fiduciary duties. Claims made after financial collapse can expose leaders to significant defence costs and potential personal liability.

D&O insurance for private companies

Private-company directors and officers may face claims from shareholders, employees, customers, competitors, lenders, regulators or other stakeholders. Watch this short video for an overview of common private-company D&O risks.

D&O insurance for non-profit organizations

Non-profit boards may be volunteer-led, but their governance responsibilities are real. Employment disputes, member complaints, allegations of discrimination, financial oversight and bylaw decisions can all result in claims. This video highlights risks specific to non-profit organizations.

How claims-made coverage works

D&O insurance is generally written on a claims-made and reported basis. In simple terms, the policy usually needs to be active when the claim is first made and reported. The alleged wrongful act may have happened earlier, but it must fall after any applicable retroactive date.

Continuous coverage matters. A former director may still be named in a future claim arising from decisions made while serving on the board. If a director retires or an organization closes, merges or is sold, an extended reporting period – sometimes called run-off or tail coverage – may allow eligible future claims to be reported. Availability and conditions vary by insurer.

D&O and related coverages

Coverage	Typical risk
D&O liability	Leadership, governance and management allegations against directors, officers or the organization
Employment practices liability	Wrongful dismissal, discrimination, harassment and other employment-related allegations
Professional liability / E&O	Claims alleging an error, omission or negligence in professional services
Commercial general liability	Third-party bodily injury, property damage and certain personal or advertising injuries
Cyber liability	Privacy breaches, network incidents and related response costs

An organization may need more than one policy. BIIS can review your operations and help identify gaps between D&O, professional liability, commercial general liability and cyber coverage.

Why choose BIIS for D&O insurance?

• Market access: BIIS can approach Canadian and international insurance markets
• Practical comparison: we help you compare limits, deductibles, exclusions and claims-made provisions
• Coverage options: employment practices liability and other extensions may be available
• Flexible limits: limits up to $5 million may be available for some organizations, subject to underwriting
• Regional service: support for clients in British Columbia, Alberta and Ontario

Frequently asked questions

Is D&O insurance mandatory?

It is not mandatory for every organization, but a lender, investor, funder, contract or regulator may require it. Organizations also use D&O insurance to help recruit and retain qualified directors who want protection for eligible claims arising from their board service.

Does D&O insurance cover the organization as well as its directors?

It may. Many policies include entity coverage for certain claims against the organization, but the scope varies. Review the insured-person and entity-coverage provisions carefully.

Does D&O insurance cover employment claims?

Employment practices liability may be included, added by endorsement or purchased separately. The policy should be checked for wrongful dismissal, discrimination, harassment, third-party claims, sublimits and exclusions.

How much D&O coverage does an organization need?

The appropriate limit depends on the organization’s size, financial condition, number of employees, governance structure, contracts, funding sources, operations and potential claimants. BIIS can help assess these factors and compare available limits.