Attention Commercial School & Childcare Operators
Directors & officers liability insurance is NOT just for the non-profit organization.
It may come as a surprise to many to learn that private organizations and their owners have similar exposures to litigation as Directors & Officers serving on a “Non-profit” Board. Setting up an incorporated entity does not shield the organization or owners from being named in a lawsuit for “wrongful acts”, errors and omissions, or wrongful employment related actions. While organizational structures can differ significantly, regulations imposed by various Ministry governed Acts and Bills mean both non- profit and commercial operations must play by the same rules and be held accountable.
The sources of “For-profit” D&O Liability suits can come from customers (parents), suppliers, competitors, creditors, government and, thanks to Bill 168, even the most trusted employees. The key to understanding how insurance products respond is to know the definitions of loss defined as a “wrongful act” and that this is distinct and excluded from most standard General Liability wordings. Your school package policy that provides Commercial General Liability responds to two primary areas, namely bodily injury and property damage for which your school or centre can be found negligent.
A Directors & Officers Liability policy will typically revolve around the insuring agreement that refers to “All loss which the Director or Officer shall become legally obligated to pay as a Claim first made against them during the Policy Period for a Wrongful Act” and for which the Corporation is unable to indemnify them by law or by reason of its financial impairment. The definition of Director or Officer is that of a duly elected or appointed director of the Corporation, along with further definitions of insured persons (includes employees and spouses as co-defendants, subsidiaries or affiliates). A wrongful act can mean an employment related wrongful act like harassment, discrimination, libel, slander, humiliation, defamation or invasion of privacy. It can also mean “failure to provide or enforce adequate or consistent corporate policies and procedures designed to prevent, halt or punish the conduct highlighted in these types of wrongful acts”. The other important coverage issue is “defense costs” and how insurance can respond to pay high legal costs to prove your case. Outside Directors’Wrongful Acts are also included.
It has become increasingly important to keep up with current laws and regulations that set standards of practice for both childcare and school safety and operations. If your policies and procedures are not compliant with current standards, even the best policy will not protect you. There are exclusions to review. We at CCV Insurance are proud to support our associations and their members in helping them understand these important areas. We also encourage you to contact your associations for upcoming events, workshops and resources to provide more detailed information and access to MySchool for “Better Insurance”. Both non-profit and commercial operators deserve to BE SURE when it comes to all matters of liability insurance!