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Excess Side A DIC: When All Else Fails

Now more than ever, bank directors and officers should be concerned whether their management liability coverage will be there when they need it most.

Carriers continue to broaden the scope of D&O coverage which now goes well beyond the scope of traditional D&O insurance.  Among other possibilities, the dilution or exhaustion of available limits that are paid for the covered bank (the entity), officers and directors can be put in a position of being without coverage when most needed.

The proper placement of an Excess Side A DIC policy can remedy many potential problems with the structure of a D&O program.  The benefits that can be provided by an Excess Side A DIC policy include:

  • Additional  limits when severe losses are experienced
  • Limits that can only be used for the protection of personal assets of management
  • Broader coverage, fewer exclusions and a provision that the policy can drop down to primary when underlying exclusions apply
  • Inability of the carrier to rescind coverage for any reason, even alleged application misrepresentations

The ability of banks to retain competent management and directors often depends on the protection they provide to these individuals from allegations of mismanagement.  In addition to a primary management liability policy, insureds should consider the additional placement of an Excess Side A DIC policy to provide an unassailable layer of coverage in the worst of circumstances.

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