Independent Director Liability

Primary scope of coverage

No presumptive indemnification (coverage applies without any deductible if the entity rightly or wrongly refuses, or is financially unable, to indemnify)

If an excess policy, there is full Difference in Conditions Coverage if underlying insurance rescinds coverage, wrongfully refuses to cover the loss, is financially unable to pay the loss, is not liable for the loss, or is subject to an automatic bankruptcy stay

Broad definition of “claim” includes oral or written demands, civil and criminal proceedings, arbitrations, and administrative and regulatory proceedings and investigations

Broad definition of “claim” also includes formal and informal interviews of insured persons by any governmental or self-regulatory authority

Broad definition of “entity” includes 501(c)(3) entities sponsored exclusively by the entity and foundations, charitable trusts, or political action committees the entity controls

Broad definition of “independent director” includes:

Any person elected or appointed a nonemployee director
An extension of coverage to spouses and domestic partners of independent directors

Blanket Nonprofit Outside Position Coverage and scheduled coverage of For-Profit Outside Position Coverage

Broad definition of "wrongful act" includes service or status as fiduciaries of employee benefit plan sponsored solely by the insured entity

Broad definition of "loss" expressly includes:

Punitive, exemplary, and multiple damages when insurable under the applicable law most favorable to the insured
Loss from claims under Section 11 and 12 of the Securities Act of 1933
Penalties under the Foreign Corrupt Practices Act

No express exclusions concerning:

Employee Retirement Income Security Act
Pollution
Defamation or invasion of privacy
Failure to maintain insurance
Section 16(b) of the Securities Exchange Act of 1934

Narrow bodily injury/property damage exclusion:

Not applicable to emotional distress
Not applicable to pollution claims, provided that coverage is excess of general liability or environmental liability policies

Narrow personal profit exclusion:

Applies only if illegal personal profit established by final judgment or is repaid to entity
Not applicable to loss from claims under Section 11 and 12 of the Securities Act of 1933
Not applicable to defense costs

Narrow deliberate crime or fraud exclusion:

Applies only if deliberate crime or fraud established by final judgment in any proceeding
Not applicable to defense costs

Narrow insured vs. insured exclusion:

Applies only to claims by or on behalf of the entity if at least two current executive officers approve or assist in the claim
Not applicable to claims by or on behalf of insured persons
Not applicable to claims outside of the U.S. or Canada
Not applicable after named insured has change of control or files bankruptcy
Not applicable to claims by a bankruptcy trustee, etc.
Not applicable to defense costs

Mandatory advancement of defense fees and expenses

Liberal notice provisions:

Notice of claim as soon as practicable, not later than 90 days after the end of the policy period
Notice of circumstances is permitted during the discovery period

Automatic five-year Run-Off Coverage after named insured acquired, at no additional premium

No panel counsel

Nonrescindable

Broad Subsidiary Acquisition/Creation Coverage:

Coverage automatic for newly acquired subsidiaries unless assets exceed 20% of entity's assets
90-day automatic coverage for subsidiaries that exceed 20% of reporting threshold

Noncancelable by insured or insurer except for nonpayment, upon 20 days' notice

Mandatory coverage arbitration, available only at insured's request