Classic split of a directors and officers policy by whether the indemnity protects the director, the company or its securities.
Side A, B and C cover structures a directors and officers policy by the nature of the insured protected. Side A directly covers directors when the company cannot indemnify them, for example in insolvency or where indemnification is legally barred, and is the most valuable protection for a personally exposed board member. Side B reimburses the company when it indemnifies its directors. Side C, called entity cover, protects the company itself for its own liability, most often for securities litigation. This architecture responds to the diversity of claim situations and the hierarchy of protection priorities. Dedicated Side A policies, often on a difference-in-conditions basis, offer enhanced protection to directors alone. For the underwriter, understanding the split across the three sections is essential to assess real exposure and the order in which cover is exhausted in a complex claim.
If a company facing creditor claims goes bankrupt, Side A cover personally protects directors where the company can no longer indemnify them.
Side A, Side B, Side C, structure D&O, Side A DIC