Page 15 - Smith Ins. Primer

Directors and O cers Liability: cont. How It Pays
Indemnity Contract
The insurance company will indemnify the associa on for any costs for which the associa on becomes legally liable. The associa on is responsible for hiring and paying legal counsel un l indemni ed by the insurance company. Indemni ca on may not occur un l the claim is concluded.
Pay on Behalf of Contract
The insurance company will choose legal counsel, handle the claim, and pay any costs for which the associa on becomes legally liable including costs of the defense.
Defense Costs
Determine whether defense costs are included in the policy limit or are paid in addi on to the policy limit.
Exclusion Review
The coverage provided by directors and o cers’ liability forms varies greatly. The extent of coverage provided or not provided can be determined by reviewing policy exclusions. Those exclusions may include:
• Failure to maintain adequate insurance
• Non-monetary damages (the most common type of D&O claim today)
• Discrimina on
• Injunc ve relief
• Wrongful termina on
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