Understanding the Interplay of Coverages


The tendency is to broaden D&O policies to provide as much balance sheet protection as possible, but it’s important to understand how different coverages work together.


“What you really want to be aware of is what’s going to complete those limits and whether or not you’re going to have sufficient limits at the end of the day to protect the directors and officers.” Janet Dreifuss, Alliant


When a blended policy covers directors, officers and the nonprofit entity itself, brokers must help insureds understand how the coverages work together. The risk is that limits will be depleted quickly, putting the personal assets of the directors and officers at risk. More and more employment practices claims are naming directors as individual defendants. This is a strategy plaintiffs’ lawyers use to bring the parties to the table more quickly with larger settlements. In some cases, directors and officers may be interested in independent director liability policies for added protection.


Copyright © 2012 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise.


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