Side-A, aka Directors and Officers Liability, is the first insurance agreement of a D&O policy. Side-A protects executives from claims in the absence of compensation for the companies in their organization. Some D&O policies also include a third insurance policy, Side-C, also known as security coverage. Side C coverage is usually reserved for publicly traded companies and protects the company against its own liability risks. A typical D&O insurance consists of three insurance contracts – page A, page B and page C. Of these three cover elements, the cover of page A is the only coverage that applies exclusively to directors and senior executives. Page Coverage is insurance for the company`s directors and officers and is triggered if the company refuses or is unable to compensate its directors and senior executives. The cover of Page A is a personal asset protection for directors and senior executives, as it covers a loss resulting from rights for which the company has not compensated them. These corporate coverages, which are typically only available to large organizations on a stand-alone basis, make ML a highly cost-effective insurance solution. In addition to traditional liability agreements for directors and senior managers and insurance contracts for corporate reimbursements, it often contains the following: take, for example, an officer who is named in a formal investigation by supervisory authorities following allegations of unlawful conduct. In accordance with its indemnification obligations, the organization begins to assume defense costs on behalf of the executive and, therefore, submits to its insurer a right under the Side B insurance agreement and demands the reimbursement of these costs.
Side-B, also known as Corporate Reimbursement, is the second insurance agreement of a D&O policy. Side-B reimburses an organization for the costs it incurs in defending its management, in accordance with its indemnification obligations. D&O provides coverage to an organization and its management on many fronts. While no two policies are the same, a typical policy offers three forms of protection by default, as described in its insurance agreements; Page A, page B and page C. In addition to these three basic agreements, there are complementary or complementary agreements, such as shareholder derivatives insurance, external direct insurance and environmental understanding. These agreements will be from page D, page E, page F, etc. A typical D&O insurance policy is divided into three insurance contracts: page A, page B, and page C, all of which have the same uniform insurance limit: side-C is usually offered by insurers as an optional insurance agreement, allowing policyholders to choose this protection for the payment of additional premiums. The additional premium is calculated to compensate the insurer for the risk of additional loss that side-C entails.
As a result, the directors immediately notify their D&O insurer and seek protection under the side-A insurance agreement. The insurer is now responsible for financing the costs of its defence and for the subsequent settlement of claims. Page A is the part of a D&O directive that reacts when a company is unable to compensate its directors and senior executives. this part is called “subject to personal protection” of a D&O insurance contract. A frequent example of when this insurance agreement would react is when a company goes bankrupt….