Introduction

Selecting a Directors & Officers (D&O) insurer is ultimately about contract quality and claims performance. This guide gives Canadian companies (outside Quebec) a practical, repeatable way to compare carriers, centered on one evaluation matrix and clear explanations of high‑impact policy terms like Side‑A DIC, severability, and conduct exclusions. For fundamentals on what D&O covers, see Summit’s overview of Directors & Officers Insurance.

How D&O programs are structured (what you’re actually buying)

• Side A: Protects individual directors/officers when the company can’t indemnify them (e.g., insolvency). Typically no retention applies to Side A.

• Side B: Reimburses the company for indemnifying directors/officers (retention applies).

• Side C: Entity coverage (public companies: usually securities claims; private companies: broader but varies by carrier). Retentions apply.

• Side‑A DIC: A separate, excess layer designed to “drop down” when the underlying tower won’t or can’t respond (e.g., bankruptcy stay, rescission, or narrower terms below).

The D&O carrier evaluation matrix

Use this table to score each carrier 1–5 on each criterion. Prioritize Side‑A and claims mechanics first; price should be weighed only after coverage and claims posture.

Pro tip: score carriers, weight Side‑A‑related rows 2×, then compare total weighted scores before you consider price.

Key trade‑offs explained

Side‑A DIC (Difference‑in‑Conditions)

• Purpose: Protect individuals when the underlying tower won’t respond (e.g., rescission, insolvency stay, narrower wording below, failure to advance defense costs).

• What to seek: Non‑rescissable Side‑A; broad “drop‑down” triggers; minimal exclusions; clear bankruptcy wording; separate limits.

Severability and knowledge imputation

• Why it matters: A CFO’s or CEO’s knowledge should not void coverage for independent directors.

• What to seek: Full application severability for all insured persons; no imputation to other individuals; if imputation exists, confine it to specific individuals for the entity only.

Conduct exclusions (fraud, dishonest acts, personal profit)

• Why it matters: Early‑stage investigations settle long before “final adjudication”; you need advancement until there’s a final, non‑appealable adjudication in the underlying proceeding.

• What to seek: “Final adjudication in the underlying proceeding” language; severability so one person’s conduct doesn’t impair others; narrow “profitable gain” wording.

Priority/order of payments and bankruptcy language

• Why it matters: In insolvency, Side‑A should pay individuals first, even if entity claims also exist.

• What to seek: Explicit order‑of‑payments prioritizing Side‑A; bankruptcy‑remote language ensuring Side‑A proceeds can’t be stayed or treated as estate assets.

Insured‑vs‑insured exclusion carve‑outs

• Why it matters: Many modern claims are derivative actions, whistleblower actions, or brought by receivers/trustees.

• What to seek: Carve‑outs for derivative demands, whistleblowers, bankruptcy trustees/receivers, employment‑related claims (as applicable), and independent director carve‑backs.

Advancement of defense costs

• Why it matters: Defense costs dominate D&O losses and arise before liability is determined.

• What to seek: Mandatory advancement within a set number of days after request; limited reimbursement only upon final adjudication triggering an exclusion.

Plain‑English glossary (quick reference)

• Side A: Personal asset protection for directors/officers when the company cannot indemnify them.

• Side B: Reimburses the company for indemnifying directors/officers.

• Side C: Entity coverage (public: securities claims; private: varies by policy).

• Side‑A DIC: Separate, excess Side‑A layer that “drops down” when the base tower won’t respond or is narrower.

• Severability: Misstatements by one insured won’t be imputed to others (preserves their coverage).

• Knowledge imputation: Whose knowledge counts for misrepresentation—ideally limited to specific executives for the entity only.

• Conduct exclusion: Bars coverage for fraud or illegal profit—best restricted to final, non‑appealable adjudication in the underlying proceeding.

• Order/priority of payments: Dictates that Side‑A pays individuals before entity claims in multi‑claim scenarios.

• Insured‑vs‑insured: Excludes claims between insureds; modern policies add carve‑outs for derivative suits, whistleblowers, and bankruptcy actors.

• Outside Directorship Liability (ODL): Coverage for service on outside boards, typically scheduled; automatic ODL is stronger.

• Retention: Amount you pay before the insurer responds (none for Side‑A; applies to Side B/C).

How to run a clean D&O market search with Summit

Summit is an independent Canadian brokerage that compares coverage and pricing across multiple insurers and curates policy terms to your risk profile. See Business Insurance for our approach and How We Get Paid for full compensation transparency. We support businesses across Canada outside Quebec.

What to prepare (to speed underwriting and improve terms):

• Corporate structure chart; cap table summary; biographies of key directors/officers.

• Financials (YTD and last two fiscal years); liquidity runway for growth companies.

• Securities profile (public/private), recent or planned financings, and any acquisitions.

• Loss runs and pending/prior litigation or regulatory inquiries.

• Governance controls: audit committee, whistleblower policy, insider‑trading policy, cybersecurity posture.

Process Summit typically follows: 1) Exposure mapping and coverage benchmarking by size/sector; 2) Term‑by‑term carrier negotiation (focus on Side‑A, severability, conduct exclusions); 3) Claims protocol setup and panel counsel preferences. For claims, our 24/7 process is outlined on Summit Claim Services.

Broker market access (D&O)

As an independent Canadian brokerage, Summit canvasses multiple Canadian and global D&O insurers to build competitive towers and curate wordings that fit your profile.

What this means for you:

• Multiple quotes and structures (Side‑A, ABC, and Side‑A DIC) to compare against the matrix above

• Stronger chances to secure “final adjudication” conduct wording, robust severability, and clear order‑of‑payments

• Broader options on panel counsel and claims handling commitments

How we operate:

• Transparent compensation and placement process: see How We Get Paid

• Side‑by‑side market summaries with specimen forms and endorsements on request

• Available to businesses across Canada outside Quebec; start a sweep via Contact Us

Last updated: December 2025

Frequently asked questions

• Do all companies need Side‑A DIC? Not always, but it is strongly considered where director attraction/retention, financing activity, or insolvency risk is material.

• Does Side‑A have a retention? Typically no; Side B/C do. Check declarations.

• Can private companies restrict Side C to securities claims only? Some policies do; confirm scope if you prefer narrower entity coverage.

• Which matters more—limit size or wording? Wording for Side‑A and claims mechanics often determines real‑world protection; add limits once wording is right.

When to call us

If your company is changing stage (e.g., major financing, going public, material M&A, or leadership change), it’s the right time to re‑run the matrix. Summit will compare carriers transparently and curate terms that prioritize individual protection first. Start with Directors & Officers Insurance and How We Get Paid to understand our approach.