In these volatile economic times, solid D&O insurance coverage can be vital to protecting your company’s executives. But a top-notch D&O program has a lot of facets that need to be considered. So to that end, Caroline Spangenberg and Brian Epps of Kilpatrick Stockton have come up with a list of tips to make sure your D&O policy is doing what you need it to do.
Be diligent in the application process and negotiate the language.
Providing complete and accurate disclosures in the policy application is critical because material misrepresentations in many states avoid coverage even without proof of an intent to deceive and without having to show that the misrepresentation was related to the loss. In many states, to demonstrate materiality, the insurer need not prove that it would not have issued the policy at all – merely that it would not have issued it on the same terms and conditions or for the same premium. If the insurer succeeds in rescinding the policy on the basis of misrepresentation, it is void – there is no coverage even for innocent insureds.
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