Description of Coverages

Side A – Directors and Officers Liability Covers damages and expenses assessed against a director or officer who has not been indemnified for these costs by the corporation It protects directors’ and officers’ personal assets. A company may be unable to provide indemnification because it is bankrupt, or they are barred from indemnifying a director or officer by law. States generally prohibit indemnification of directors or officers who are in a suit filed by shareholders on the company’s behalf against directors or officers.

Side B – Corporate Reimbursement (Indemnification) is defined as protection from damage, injury, financial loss or legal liability.  In this case, Side B – Indemnification reimburses the corporation for funds it has paid to directors or officers or on their behalf, as compensation.

Side C – Entity Securities Coverage (Corporate Liability) Covers claims or suits filed directly against the corporation as a result of an offer, sale or purchase of its securities.  The scope of this coverage varies depending on whether the insured company is a private, public or non-profit corporation.

Common Insurance Terms

Management liability is a type of D&O policy for small and medium business.   It is structured as a package-policy and contains a range of broad coverages to protect a business and its managers from several types of claims.

The Management Liability Policy is a very cost effective. In addition to traditional directors’ and officers’ liability and corporate reimbursement insuring agreements, the following can be included in the policy:

• Corporate liability: coverage for claims made against the entity
• Employment practices liability: entity coverage for employment-related claims
• Superannuation(pension) trustee liability: entity coverage for claims arising from the management of retirement, pension fund or 401k schemes
• Crime: coverage for crime committed against the entity, such as fraud and misappropriation of funds
• Statutory liability: entity coverage for monetary penalties and possibly fines, resulting from breaches in legislation
• Taxation investigation: coverage for investigations undertaken by taxation authorities such as the IRS.

D&O policies are written on a claims-made form.

For more information on claims-made-coverages click HERE