Page 71 - Washington Nonprofit Handbook 2018 Edition

y Intentional conduct such as libel and slander—as a general rule,
insurance does not cover intentional conduct;

y Bodily injury or property damage;

y A director or officer gaining any personal profit or advantage to which
he or she was not legally entitled;

y ERISA claims;

y Employment claims;

y Claims brought by the corporation against its own directors or officers;
or

y Losses covered by other insurance.

D&O insurance policies are generally claims-made policies. That is, a claim
must be both made and reported during the policy period for there to be coverage.
Therefore, it is extremely important to notify the carrier the moment the
corporation or its directors or officers recognize that a claim may be made. D&O
insurance policies may give the insurer the right to choose defense counsel, or,
more often, may limit the policyholders’ choice of counsel. D&O insurance policies
generally require the policyholder to notify the carrier of all settlement offers and
obtain its consent before accepting them. It is very important to recognize that,
while D&O insurance policies generally require a carrier to pay ongoing defense
costs, such payment can be charged against the policy’s liability limit, reducing the
amount available for payment of a judgment or settlement.

The elements of D&O insurance such as deductibles, co-insurance levels,
exclusions and other aspects can vary significantly. The board committee dealing
with insurance issues should review such items carefully and should consider
consulting an insurance broker knowledgeable in this field. Except for exclusions
for intentional conduct, other exclusions and coverage features can often be
changed through negotiation with the carrier and/or payment of additional
premium.

WASHINGTON NONPROFIT HANDBOOK -60- 2018