Directors and Officers liability

January 8th, 2016 in Insurance

Becoming a Director or an Officer on a board of Directors is an important commitment for yourself and the organization. The level of involvement and length of term are two major factors for people in considering becoming active on a board. There is also a legal duty on your part to act in the best interests of the board at all times. Whether it is not-for profit or for-profit board you are now held accountable on a much higher level than in previous decades.  In fact, there are now advanced levels of professional accreditation for potential Directors and Officers.

What happens if I am invited to join a board?

By accepting a position on a board you are directly assuming a liability exposure on behalf of the board and if the board does not have Directors and Officers Liability insurance, then you could be found personally liable for decisions that may have a negative impact on the board and/or shareholders in the case of for profit organizations.  Even if other Directors were found to be legally liable for their detrimental actions, you would also be drawn in to the lawsuit.

Learn more about the responsibilities of a Director;


Profit versus not-for- profit boards

Your responsibilities as a Director are fundamentally the same. You must act in good faith at all times and make appropriate decisions in attaining the goals of the Board. Becoming a local board member for a community organization is a great way to give back to but due diligence must be made by the potential member to ensure there is adequate protection place for any liability exposure.


Some may argue that not-for-profit organizations have few assets; therefore, the risk of a lawsuit is small. However, a large part of legal expense is defence costs due to the length of the time involved in adjudicating a case. If there is no D&O policy in force then these costs are personally borne by the Directors which can also include their spouses’ assets.

A key part of any organization’s insurance program will include Directors’ and Officers’ insurance. It is also an important recruiting tool in attracting qualified, competent future Directors.

 lease contact us if you would like to know more or to set up an appointment to discuss your business's needs.