The ABCs of D&O Insurance

D&O insurance policies typically include three standard insuring agreements—Sides A, B and C—detailing the scope of coverage and the insurer’s promise to indemnify policyholders against covered losses:

1. Side A (D&O liability coverage)—Side A protects individual directors and officers against losses when the organization cannot indemnify them. This coverage safeguards personal assets and is crucial for attracting qualified board members.
2. Side B (corporate reimbursement coverage)— Also known as corporate reimbursement coverage, Side B reimburses the organization for defense expenses or indemnification costs incurred on behalf of its directors and officers. This provides balance sheet protection by covering legal costs the company advances.
3. Side C (entity coverage)—Side C offers protection for the organization itself. For public companies, this coverage is typically limited to securities claims, reflecting the higher risk of shareholder lawsuits. For privately held companies, it generally extends to a broader range of claims stemming from wrongful acts by the organization or its directors and officers.

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