Meaning
Specialized executive liability insurance policies provide primary, non-indemnified coverage for directors and officers when the corporation cannot or is legally forbidden from indemnifying them, and the standard directors and officers policy fails to respond. A Side a DIC policy acts as a broad safety net that includes difference-in-conditions clauses, offering broader coverage and fewer exclusions than traditional policies to protect the personal assets of corporate leaders. This instrument governs the personal risk profile of directors during catastrophic corporate failures or insolvency proceedings.
It cannot be used to pay claims against the company itself.
Personal Asset Protection
Asset protection for individual board members is the primary purpose of this insurance structure. It steps in when the company is unable to pay due to insolvency or legal restrictions. This coverage cannot be seized by the company’s bankruptcy trustee.
Difference In Conditions
Broadening clauses fill gaps left by standard liability policies, ensuring that directors are not left without a defense. These policies often have fewer exclusions for regulatory investigations and insolvency disputes. This feature makes them highly valuable.
Defense Funding
Legal fees are paid directly to the defense counsel on an ongoing basis rather than as a reimbursement. This prevents directors from having to pay out of pocket.
