Entity Coverage
Entity coverage on a D&O
policy covers an insured organization in addition to its director’s
and officer’s. This is a very important feature to look
for because if you do not have coverage for the entity and the
organization in named in a lawsuit then there is no coverage for
the organization itself. The organization must hire its own attorney
and pay any claims levied against it.
Duty
to Defend
This term binds the insuring
company to defend you in any claim covered under the policy. It
means that the company must hire, manage and pay for any legal
counsel used in defending you in a suit. This can be beneficial
because it saves the organization the time to hire an attorney
specialized in the area of the claim and coordinating a legal
plan.
Broad
Definition of Insured
D&O Insurance, in its purest
form, only extend coverage to the organizations director’s
and officer’s. With abroad definition of insured, you can
allow coverage for staff, committee members, and volunteers.
Defense
Cost Outside Policy Limits
In most cases the largest cost
of a claim are the costs to hire Attorney’s to defend you
in a suit. If your defense costs are outside policy limits, then
any expenses incurred to defend you are paid for in addition to
the limits stated on your policy. If you have defense cost inside
policy limits and you have a claim, the cost of defense will reduce
the amount of your policy limits; for example, you have a 1MM-limit
policy with defense cost inside policy limits and you have a claim
of 600,000 and defense cost of 500,000. Your policy will only
pay 1MM and you are responsible for the additional 100,000 (since
the claim and defense cost exceeded your 1MM limit).
Employment
Practices Liability
Employment Practices Liability
Insurance (EPLI) covers an insured person or organization against
allegations of wrongdoing in the course of employment. Wrongful
terminations, unfair hiring/firing practices, and hostile work
environments are some examples of claims that fall under the scope
of this coverage. Like General Liability, this insurance can be
written alone, however, it is many times packaged within a director’s
and officer’s (D&O) liability policy to make that policy
more comprehensive and more affordable.
Prior
Acts Coverage
Prior acts coverage extends coverage
to the organization for claims that occurred before the inception
of the policy. This is afforded only if the insured was unaware
of the claim at the time of policy inception. This coverage is
important because although a claim may have happened the insured
may not become aware of it until several months later.
Extended
Reporting Period
