What is the difference between Side A, Side B, and Side C coverage in D&O Insurance?

Side A, Side B, and Side C coverage are distinct components within a Director and Officer Liability Insurance (D&O Insurance) policy, each serving a specific purpose in the protection of directors, officers, and the organization. Here's an explanation of each:

Side A Coverage:

Purpose: Side A coverage is specifically designed to protect individual directors and officers from personal liability when the company is unable or unwilling to indemnify them. It serves as a direct source of coverage for the personal assets of directors and officers.

Key Points: Side A coverage is crucial for ensuring that the personal wealth and assets of directors and officers remain protected in the event of lawsuits or legal claims against them. It is often considered the most important aspect of D&O Insurance for individual protection.

Side B Coverage:

Purpose: Side B coverage is designed to reimburse the company for indemnification payments it makes to its directors and officers. It serves to offset the financial burden on the organization when it indemnifies its leaders for legal expenses and liabilities.

Key Points: Side B coverage helps manage the financial impact on the company and ensures that the costs of defending directors and officers do not excessively burden the organization.

Side C Coverage (Entity Coverage):

Purpose: Side C also known as entity coverage, is designed to protect the organization itself in cases of securities claims. This component generally covers the company for claims made by shareholders and investors related to securities law violations, such as misrepresentation or non-disclosure.

Key Points: Side C coverage helps protect the financial interests of the organization and its shareholders by covering liabilities related to securities claims. It is an essential component for public companies or those involved in raising capital through the sale of securities.