D&O Insurance: Costly Claims Scenarios

Claim Scenarios

D&O insurance is a necessary protection for many operations. Claims can be extremely serious and financially devastating. Consider the following claim scenarios for your clients.  

Breach of Trust

A non-profit organization held a fundraising event and received temporary funds from another organization which was to be repaid from the proceeds, yet funds were deposited into the organization’s general account by an employee and used to pay general expenses. 

The organization filed for bankruptcy and was not able to return the funds. The organization was sued for negligence, as they failed to supervise properly and for breach of trust. These types of claim scenarios can occur frequently within these organizations, so the right type of insurance coverage is recommended to mitigate financial loss.

Breach of Duty

An association board revoked an individual’s membership that brought about allegations of unethical conduct. The association was sued with a claim that the board of directors had targeted the plaintiff and the association had not been following their own bylaws.


A large non-profit organization fired an employee who had been with the organization for over 15 years. The employee, in turn, sued for wrongful termination, alleging that she had been defamed as a result of a written communication that became present outside the board of directors of the organization.


A woman was part of an educational program and became romantically involved with the leader of the program. The relationship came to an end prior to the program’s completion and issues arose between the participant and the program leader. The participant filed a human rights claim, alleging they discriminated against her, which led to a denial of the services. 

Wrongful Dismissal 

A senior executive was fired after several employees complained that sexual misconduct and harassment was involved. The executive sued for wrongful termination and interference with contractual relations. 


In today’s litigious society, claim scenarios resulting from discrimination are very common. An organization ended several corporate and administrative positions which were held by minority employees, causing employees to sue for racial discrimination.

Investigation determined that non-minority employees received bonuses while minority employees did not. All employees had to be in their role for a specified amount of time to receive bonuses; and the minority employees did not meet this requirement. 

Whistleblowing Retaliation

A food cooperative was sued by a former employee, alleging termination for reporting equipment malfunctions to regulators. The business claimed there was combativeness and abusive behavior towards other employees. It appeared he was fired for whistleblowing since termination occurred three days after he contacted regulators regarding malfunctioning equipment. 

An Injury & Termination

An employee sustained an injury on the job and filed a worker’s compensation claim; shortly after he was terminated. He filed a lawsuit alleging wrongful termination and retaliation after receiving a letter from the cooperation disagreeing with his interpretation of the injury.

Contract Confusion 

An independent contractor signed a two-year contract with a corporation assuming he could only be terminated if he engaged in unlawful activity. However, the corporation terminated the relationship claiming that he failed to reach earning goals.

The contractor sued, alleging that his contract was unlawfully terminated, and claiming unlawful interference with business and defamation, as letters were supposedly sent to his clients damaging his reputation.

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