Liability insurance for directors and officers of an incorporated organization

I am a director of a small club (22 members). We are incorporated in Ontario as a not for profit corporation. We are insured through a national organization of similar clubs for property damage and personal injury for incidents that occur at our club property. One of the reasons we incorporated was to provide limited liability for our club, directors and members. We have been approached by an Insurance Company about additional insurance for the Officers and Directors of the club. Is this really necessary?

Asked about 1 month ago in Oshawa, Ontario
Categories: Corporate/Commercial  Insurance

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Marc Z. Goldgrub

Answer by Marc Z. Goldgrub

VerifiedOntario lawyer

Like most matters is in law, the answer is "it depends". And really, as is often the case, whether you want to buy insurance is a question of whether you feel the price of it is worth the safety net it provides. 

Incorporation is not an unbreakable wall against personal liability. There are ways in which the corporate veil can be 'pierced' and put directors and officers on the hook with personal liability. 

Admittedly, for a small non-profit club, the risk of this is likely much less than, for example, a large corporation.

But ultimately, the things to consider would probably include (a) what activities the club engages in; (b) what are the chances of liability associated with those activities; and (c) are there some perhaps more identifiable legal avenues by which directors and officers could be held liable in connection with these activities? 

For any lawyer to make a proper recommendation, they would probably want to know more about the club, the activities it engages in, what its officers and directors do, and they would want to look at the bylaws, and probably the current insurance policy for the non-profit itself.

Posted 21 days ago

Marc Z. Goldgrub, J.D., LL.M. | Lawyer at Green Economy Law Professional Corporation
Licensed to Practice Law in Ontario and New York State
647-725-4308 |

Please note that this is for informational purposes only and does not constitute legal advice to you. Legal advice pertaining to your particular situation can only be provided by a lawyer who has met with you to obtain all pertinent background information necessary to give you a formal legal opinion. For formal legal advice, hire a lawyer (many give a free first consultation). Contact Marc Z. Goldgrub, or search the Lawyer Directory.

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