D&O insurance (Directors & Officers) policy forms have evolved dramatically over the last decade or so, and now typically include a variety of coverage extensions. For private companies and non-profit entities EPL is an obvious example – something we take for granted today. Entity coverage is another example, and one that is not always helpful. In certain extreme situations entity coverage can deplete limits rapidly, leaving no coverage for individual directors and officers.
Side A D&O insurance coverage, also called Side A Excess or Side A DIC, has become a mainstream insurance product ensuring that the private assets of the directors and officers are protected in the event that the organization’s D&O insurance policy is not available. Bankruptcy is an example of a situation where an organization’s D&O policy limits could be depleted due to the entity coverage provided in the policy, leaving individual directors and officers with little or no coverage – personally.
A recent article, Dispelling the Myths of Side A Directors and Officers Insurance, by Robert F. Carangelo and Paul A. Ferrillo of Weil, Gotshal & Manges LLP, (see here) provides some background on Side A D&O insurance.
Side A D&O insurance covers non-indemnifiable Loss, meaning that a Company (1) cannot advance or indemnify its directors and officers under its bylaws, or (2) is financially unable to do so.
D&O insurance is a critical coverage for most organizations, and Side A may be an important component of an organization’s D&O program. Tennant Risk Services is a specialty E&S wholesale broker and underwriting manager, and delivers expertise, markets and exemplary services for its retail agent clients in the placement of professional liability insurance (E&O, D&O, EPL, Cyber). Call to speak to one of our wholesale broker experts with your questions and concerns about D&O exposures, including Side A, or review our website for information on D&O and Side A excess.