Directors & Officers Liability Insurance is NOT just for the non-profit Organization

By: Deborah Gibson, BA, CIP

It may come as a surprise to learn that private organizations and their owners can be held accountable in the same way directors and officers serving on a non-profit board are. Setting up an incorporated entity does not shield the organization or owners from being named in a lawsuit for wrongful acts, even if unintentional, 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 Director’s and Officers Liability suits can come from customers (parents), suppliers, competitors, creditors, government and, with 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 a “director” or an “officer” is that of a duly elected or appointed director of the corporation. There are further definitions of who is covered under Directors & Officers insurance coverage, and that can include employees and spouses as co-defendants, subsidiaries or affiliates. It’s important to understand how your insurance coverage will respond to defense costs and high legal fees that can come along with proving your case.

It’s always important to keep up-to-date with current laws and regulations that set standards of practice for safety procedures and operations for both childcare centres and schools. If your policies and procedures are not compliant with current standards, even the best insurance policy will not protect you. At CCV Insurance, we are proud to support our associations and their members in helping them understand where they’re at risk. We also encourage you to contact your associations for upcoming events, workshops and resources that can provide more detailed information. Both non-profit and commercial operators deserve to BE SURE when it comes to all matters of liability insurance, and with a partner like CCV Insurance and the MySchool insurance program, you can be confident you’re protected in the event of a Director’s & Officers liability claim.