3 reasons to have D&O Liability

3 reasons to have D&O Liability

Posted 11/04/2019

by Harvard Western Insurance in

Businesses today are held to a higher standard of transparency and accountability than ever before. Being a directors and officers comes with a lot of responsibility, and while we all try to be, no one is perfect. Regardless of your company’s size or mission, the legal costs associated with a lawsuit could be crippling. Your potential for a claim can come from all directions; but identifying, evaluating, and putting a plan in place can keep you from being blindsided.

Employees

Most directors and officers are surprised to learn that their own employees are one of the most common sources of a D&O claim against their organization. If an employee feels mistreated or that their concerns have been not been addressed in a sufficient manner, they may see legal action as a means of rectifying their grievances.

The most common claims brought against directors and officers by employees are wrongful dismissal, discrimination (including workplace & sexual harassment), breach of employment contract, and failure to address health and safety concerns.

Competitors

The business world is a cut throat, fast paced, and intense place. But as you attempt to grow your organization management teams must ensure that growth is achieved through fair business practices. If your competitors believe that they have been unfairly disadvantaged by dishonest or illegal behaviour they may take legal action.

Common claims brought against directors and officers can include breaches of intellectual property, misappropriation of trade secrets, and collusion. What’s more, directors and officers may also be held liable for actions that are perceived as misleading or defamatory, with claimants seeking damages for their perceived losses.

Creditors

As directors and officers, you hold a lot of responsibility within your organization. One of which is monitoring the organization’s financial position and its ability to meet debt obligations. In the event that your organization becomes insolvent, creditors will often scrutinize the decisions of directors and officers to see if they can be held personally responsible.

Common allegations by creditors against directors and officers include breach of fiduciary duty, deliberate misconduct or negligence.


Whether you’re a non-profit, privately held or a public company, it is likely that your business can benefit from a D&O policy. Since no two businesses are the same, there is no such thing as a “standard” policy which is why we make it our priority to understand your organization and assist you with customizing your insurance to meet your unique needs.

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