Ernest Martin in What to Ask About Your D&O Policy


The board must determine whether the company’s D&O policy was negotiated to provide the broadest coverage at the best price, since the policy is subject to negotiation. More specifically, the board should at least ask the following:
1. Does it protect board members from having to pay the policy’s retention if the company fails to do so?
2. Does it have broad definitions of key terms such as “claim,” “loss,” and “wrongful act?”
3. Does it minimize the effect of exclusions such as “bad conduct,” “prior notice,” and “insured v. insured” exclusions, which reduce or eliminate coverage?
4. Does it maximize coverage for board members even if the company goes bankrupt?
5. Does it have unfavorable alternative dispute resolution clauses?

- Ernest Martin, Haynes and Boone, LLP

Excerpted from, September 6, 2013. To view full article, click here.


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