How does D&O insurance coverage work if a director is sued personally in Ontario?

Directors and officers (D&O) insurance is designed to protect individual directors and officers from the financial consequences of being personally sued over decisions made in that role, and it typically also reimburses the corporation when it indemnifies its own directors. If a director is sued personally - for example, in an oppression claim, a claim alleging a breach of fiduciary duty, or a regulatory proceeding - the policy generally responds by funding a defence and, if the claim is proven and covered, paying the resulting liability, up to the policy's limits.

Coverage disputes in this area often centre on specific exclusions common to D&O policies: claims involving alleged fraud or dishonesty (typically excluded once finally established, though usually covered during the defence stage), claims between insureds of the same company ("insured versus insured" exclusions), and conduct the director knew, or should have known, was wrongful before the policy was purchased. Because D&O policies are written with unusually specific and sometimes overlapping exclusions, a denial in this context often turns on precise policy language rather than a general coverage question, making early review of the actual policy wording especially important.