DIRECTORS AND OFFICERS LIABILITY INSURANCE DECLARATIONS

(March 2020)

INTRODUCTION

Any insurance company that provides this coverage will develop its own declarations to meet its particular requirements. While the format may change, a given carrier’s basic displayed information will be e similar to the information on this declarations because the policy makes references to the information that must be displayed.

GENERAL INFORMATION

This section includes the following information:

• Policy number
• Insurance company name
• Producer name
• Named insured or Company Name

Note: The named insured is the entity being controlled by the directors and officers for whom coverage is being provided through this policy. The entity is responsible for the premium, controls changes to the policy and receives notice of cancellation or nonrenewal.

• Mailing address

Note: This is the address where any cancellation or nonrenewal notice is mailed. The cancellation or nonrenewal is still effective if the notice is mailed but not received because the address was incorrect.

• Policy period expressed as month, day, and year commencing at 12:01 a.m. at the named insured's mailing address

RETROACTIVE DATE

Insurance does not apply to any wrongful act that occurs before the retroactive date entered in the space provided. The word “none” must be entered in that space if there is no retroactive date. If neither the word “None” nor a date is entered, the retroactive date is the same as the policy’s effective date.

PENDING OR PRIOR LITIGATION DATE

All losses for claims where litigation began prior to the Pending or Prior Litigation Date on the declarations. This exclusion applies if a date is entered. This exclusion does not apply if the word “None” is entered. This space should never be left blank.

NAMES OR POSITIONS OF INSUREDS

The policy may require the specific names of the covered directors and officers to be listed or may require only the positions to be listed. Only the named individuals or the persons occupying the listed positions are covered.

It is very important to regularly review any listing of names because substitutes are not covered. When positions are used it is important to review this listing because companies may change position responsibilities and position names that could impact who is or who is not covered under that position.

Example: Fred is the treasurer for Allowable, Inc.

Scenario 1: Allowable, Inc. lists the positions of covered individuals. Allowable decides to change Fred’s title from treasurer to the newly created Chief Financial Officer position. They do not update the positions on the declarations so when Fred, the Chief Financial Officer is sued, he is not covered because the position Chief Financial Officer is not listed.

Scenario 2: Allowable, Inc. lists the names of covered individuals. Fred dies suddenly and Stephen takes over his responsibilities on an interim basis. Because Fred is listed but Stephen is not, when Stephen is sued there is no coverage.

Some carriers may cover all directors and officers except those specifically excluded. A listing of directors and officers who are NOT to be covered are listed on the declarations. This is a broader approach that can protect the named insured from the problems described above.

COVERAGE SELECTED

One or more of the following coverages must be selected:

Directors and Officers Liability – Side A Coverage

Company Reimbursement – Side B Coverage

Company Named on Suit with Directors and Officers – Side C Coverage

LIMITS OF INSURANCE

The limits of insurance are the most paid, regardless of the number of insureds, claims made, suits brought, persons or organizations that make claims or bring suits or the coverages provided. These are not Side A, Side B or Side C limits, these are the policy limits. This section includes the following information:

• Each Claim Limit

This is the most paid for the total of damages that result from what the policy treats as a single claim. The policy states that a single claim means all claims related to a single wrongful act. The date assigned to all claims that arise from the same wrongful act is the date when the first claim was reported.

• Aggregate Limit

This is the most paid for the total of damages for all claims.

RETENTION

The insurance company is not responsible for any damages for a claim until they exceed the retention amount entered in the space provided.

PREMIUM

The annual premium is entered in the space provided. If the policy is auditable, the premium entered is an advance premium that will be adjusted after the policy expires or is cancelled.

AUDIT PERIOD

The audit period can be annual, semi-annual, quarterly, or monthly. If no box is check, the policy is not subject to audit.

ENDORSEMENTS

This section includes endorsements attached when the policy is issued. Subsequent endorsements issued after inception obviously cannot be listed but are included by inference.