Side A D&O coverage is becoming a must for any Director or Officer for both public and privately held companies
. In a professional liability insurance policy for Directors & Officers Liability, the entire limit can be eroded by outside claimants, leaving Directors and Officers exposed.
What is Side A Covererage? Simply the coverage for the Directors and Officers themselves that may not be indemnified by the company. In the By-Laws of a Corporation, Directors and Officers are typcially indemnified by the Company for thier actions on behalf of the company. Company's often buy D&O insurance to help support that indemnification. However, the indemnification is only as good as the the Company/policy indemnifying the officers. So for example in the case of a bankruptcy of a company, the company indemnifying the officers and directors will not have sufficient assets to indemnify anyone thus leaving the D&O's exposed. Further, A D&O policy is subject to a specific limit that can be exhausted by outside claims. Further, in some cases a D&O policy can be considered an asset to a bankruptcty trustee and leaving the Director and Officer completely without coverage or indemnification
If the company and the policy are both exhaused, the D&O 's will not have indemnification and thus personally liability for their actions. A properly structured D&O policy can provide coverage for the D's and O's thqat is outside of the standard D&O policy and provide the individual protection they need. The separate Side A coverage can often be negotiated in the standard D&O policy or as a separate standalone Side A policy.