Directors & Officers Liability
The Directors & Officers (D&O) Liability Policy was designed to protect the personal assets of the Insured Persons against Losses arising from Wrongful Acts.
Key Definitions
Insured Persons include any past, present or future directors, officers, employees, honorary directors or advisory directors.
Losses covered include certain amounts which the Insured Persons are legally obligated to pay, including judgments, settlements, defense costs and punitive or exemplary damages (where insurable by law). Defense costs for allegations of fraud and violations of law are paid regardless of final adjudication.
Wrongful Acts are defined as any actual or alleged omission, error, misstatement, misleading statement, neglect or breach of duty by an Insured Person in the discharge of his/her duties.
Key Features
Not all community banks are identical. Recognizing this fact, Progressive designed its D&O Policy to provide maximum flexibility so that you can structure the policy to suit the unique needs of your bank and its board of directors.
Preserving personal liability when the corporation cannot provide indemnification.
In the event indemnification is unavailable, Progressive’s A-Side Plus ® Endorsement provides a separate and non-rescindable limit of liability to protect the personal liability of your directors and officers. See our A-Side Plus® coverage summary for more specific details.
Preserving personal liability coverage when the entity is implicated.
Recent corporate litigation has raised questions as to how to best protect the personal liability of directors and officers in situations where the D&O Policy has been expanded to cover the corporate entity. Progressive offers two options to address this issue:
≡ Purchase a separate limit of liability to cover the corporation for securities liability, scheduled professional services, or all professional services; or
≡ Purchase a shared limit of liability with non-erosion and order of payment protection.
The non-erosion feature states that paid entity claims will not erode the limit of liability available for the individual insureds under Insuring Agreement A.
The order of payments feature ensures that claims against individuals are paid first, indemnifiable claims are paid next, and finally, payments are made for claims against the corporation.
Preserving personal liability coverage when fraud is involved.
Case law has established that misstatements made by the individual signing the application can be imputed to other insureds.
To protect innocent insureds (outside directors for example), Progressive’s liability policies provide “full severability,” whereby intentional misrepresentations made by one or more of the insured persons will not be imputed to the other insureds. Under such circumstances, no coverage will be provided for the individuals who committed or knew of the fraudulent act, but coverage would still be available for other insureds (exceptions apply to the company if the fraud involves key management personnel).
More importantly, defense costs for allegations of fraud and violations of law are expressly covered; therefore, defense costs need not be reimbursed.
Flexible defense provision.
Allows the insured to select “Duty to Defend” or “No Duty to Defend” coverage (except Employment Practices Liability coverage).
≡ No Duty to Defend
Control of the claim is handled by the insured who maintains freedom to handle and direct course of the litigation. (Progressive has the right to approve counsel and actively associate in settlement and defense.)
≡ Duty to Defend
Provides “Peace of Mind Protection” whereby Progressive handles the matter from start to finish with counsel experienced in matters relevant to the claim.
Expansive Policy Form.
Progressive’s D&O Policy does not contain the following exclusions often found in other D&O contracts:
≡ Mechanical Malfunctions
≡ Hostile Takeover
≡ Legal Lending Limit
≡ Insider (and Insider Affiliated) Loans
≡ Past Acts
≡ Securities Offerings
≡ Professional Services (exceptions apply)
≡ Regulatory
≡ Intellectual Property
≡ Failure to Maintain Insurance