Regulatory: Understanding your D&O insurance policy: D&O insurance can differ significantly from other liability insurance

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Originally published in InsideCounsel on March 7, 2012.

Directors and Officers (D&O) insurance offers vital protection to a company and to its directors and officers against financial claims and liabilities. D&O insurance is unlike other liability insurance in several important respects. First, it generally provides coverage for both the company and its officers and directors, despite the fact that the interests of the insureds often diverge.

This aspect of D&O insurance stresses the importance of understanding the basics of a D&O policy. Although there are a number of variations, a D&O policy typically has three basic insuring agreements, often referred to as Side A, Side B and Side C. Side A covers losses incurred by individual directors and officers for which the company has not provided indemnification. Side B covers losses incurred by the company in indemnifying its officers or directors. Side C covers losses incurred by the company as a result of securities claims made directly against the company.

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Published In: Business Organization Updates, General Business Updates, Insurance Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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