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Directors and Officers Liability
Public Company
What are Insured Events under a typical policy?
Public Company Directors and Officers Liability policies are designed to protect corporate balance sheet and the personal assets of the individual Directors and Officers in the event of allegations of wrongdoing against the individual or entity. The typical policy will include three insuring agreements.
Side A – coverage for the individual insured in the event that no indemnification is provided by the entity.
Indemnification may not be made by the entity in the following circumstances:
- Entity can not pay due to financial insolvency or bankruptcy
- Entity refuses to pay due to “wiggle room” in indemnification provision
- Entity is forbidden to pay due to public policy
Side B – reimbursement coverage for the entity in the event that indemnification has been provided to an individual insured
Side C – coverage for SEC related claims first made against the entity
Most Public Company D/O policies today have been expanded to include non entity coverage for Employment Practice Wrongful acts. While this additional coverage feature is included for no additional premium we strongly recommend consideration of a stand – alone policy to maximize coverage features and deductible levels as well as the avoidance of a dilution of limits for the D/O coverages.
Who is an Insured?
Individual Insured - past, present or future duly elected or appointed directors, officers, management committee members or members of the Board of Managers of the Company (foreign equivalency wording and outside director wording often clarifies this definition). Individual Insured may also include Employees.
The Company – Named Insured and any subsidiary
What is a Claim?
A claim is generally defined as a written demand for monetary or non monetary relief. Also, civil, criminal, administrative, regulatory or arbitration proceedings commenced by the service of a complaint, return of an indictment or filing of a notice of charges fall under most definitions of Claim.
What is a Wrongful Act?
With respect to Individual Insured’s, any breach of duty, neglect, error, misstatement, misleading statement, omission or act by such Insured in their respective duties.
With respect to the Company, any breach of duty, neglect, error, misstatement, misleading statement, omission or act by the company.
What is considered a Loss?
- Damages
- Punitive damages (may need to be added by endorsement)
- Judgments
- Settlements
- Pre- and post-judgment interest
- Defense Costs – usually with in the limits of liability
What may be an excluded Loss?
- civil or criminal fines or penalties imposed by law
- taxes
- any amount for which the Insureds are not financially liable or which are without legal recourse to the Insureds
- matters which may be deemed uninsurable under by law
- matters occurring prior to existing pending / prior litigation dates or past acts dates
Standard Policy Exclusions:
- gaining in fact of a profit or advantage not entitled to
- illegal remuneration
- fraudulent and dishonest acts
- prior notice of claims exclusion
- Contract exclusion
- Insured vs Insured Exclusion (carve outs for cross claims, bankruptcy trustees and certain EPLI events)
- BI/PD exclusion (security claim carve out)
- Pollution Exclusion
- ERISA exclusion
- Professional Services Exclusion
Standard General Conditions:
- Spousal and estate extensions
- Retention applicable to all claims except non indemnifiable claims
- Reimbursement form
- Notice and claim reporting provision
- Hammer Clause / Settlement provision (may be modified or deleted)
- Extended Reporting Period Provision
- Cancellation Clause
- Change in control Provision
- Automatic Subsidiary Threshold (variable)
- Worldwide Territory
- Outside Entity Coverage
- Severability
Contact Us Today For A Blank Application And Specimen Policy So We Can Begin The Application Process On Your Behalf.
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