The Hartford Financial Services Group Inc. has created Priority Protection, a new D&O product that protects the individual directors and officers.
“Directors and officers (D&O) coverage was originally created to help companies attract and retain high-quality board members and senior executives by shielding their personal assets from lawsuits. As the coverage expanded to include the corporation, protection for the individual director and officer eroded,” according to Michael Karmilowicz, vice president at The Hartford’s Hartford Financial Products unit in New York City.
Lawsuits are generally filed against the company and its key executives. Defending the company, however, can reportedly quickly exhaust policy limits so personal assets are potentially left vulnerable. Also, a traditional D&O policy can be considered an asset of the company during a bankruptcy proceeding, so there may be no protection available for the directors and officers.
The Hartford’s Priority Protection is reportedly a highly flexible, non- rescindable policy designed for public and private organizations of all sizes. It can be purchased to supplement a traditional D&O policy or by itself. Among its features:
* Severability of the application and the conduct exclusions preserves
coverage for “innocent” insureds by not imputing one individual’s knowledge to another.
* State-of-the-art “non-rescindable” language ensures that the insurance remains in place throughout the policy term.
* Broad definition of “claim” includes coverage for written demands for
civil and criminal proceedings, formal administrative or regulatory proceedings, such as target letters from investigative authorities; and
subpoenas from the U.S. Securities & Exchange Commission.
* Flexibility to choose defense counsel.
* Difference in Conditions (DIC) feature is available to provide first-dollar protection for non-indemnifiable claims when an individual insured is unable to access D&O coverage due to cancellation of underlying policies, denial of coverage, or if bankruptcy proceedings prohibit the company from advancing defense costs.
“In today’s challenging business, legal and regulatory environment, directors and officers want to know that they have state-of-the-art personal coverage with an insurance carrier that consistently receives high ratings for its claim-paying ability,” said Karmilowicz, noting that “The Hartford’s Priority Protection is supported by a team of claim and underwriting professionals with a track record of dependability and fairness.”
For more information about Priority Protection or The Hartford’s other financial products, customers can contact their broker or agent, or visit http://www.hfpinsurance.com . Coverage is provided by the member companies of The Hartford and may not be available in all states. See policy for actual coverage wording.
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