In today’s blog post, Miller Friel Attorney Tab Turano discusses the basics of insurance policy review for corporate directors and officers (“D&O”) D&O insurance programs. Companies purchase D&O insurance to protect against a wide-array of liabilities, from securities lawsuits to governmental investigations. Often times, corporate policyholders accept either off-the-shelf policies offered by insurance carriers, or pre-approved insurance broker enhancements. These form policies and broker enhancements are seldom state-of-the-art, and can always be improved. Unless the language is truly boilerplate in nature, Insurance companies are open to negotiation. The best language maximizes insurance coverage, rather than minimizes it, but this kind of language is not what is offered. For this reason, many corporations retain insurance coverage lawyers at the underwriting stage to provide a second look at proposed coverage. Counsel can combine their knowledge of both the insurance market and insurance law to craft enhancements to standard policy terms, and broker-suggested enhancements, which can, in some cases, do more harm than good.
Please watch the video to learn more, or Contact us if you have any questions.
The transcript of the video is below:
Insurance Policy Review 101 (Part 1)
It’s important to keep in mind as well that when you’re purchasing insurance, the policy forms offered by the insurance company are typically at least in the first instance fairly boilerplate standard forms. You are not necessarily required to use those forms when you purchase the policy. There’s plenty of room for negotiation. You can negotiate specific forms based on your company’s needs. You can also negotiate, or you should attempt to negotiate, the most state of the art language that’s available in insurance policies.
Typically, a company’s going to be represented by their insurance broker in this process. If you have a good broker, they’re going to do a good job of making sure that the policy that you end up with is state of the art and does contain the most favorable language for you as a company. But you don’t necessarily even want to rely on your broker to do that. One of your options, of course, is during the underwriting process to approach coverage counsel. Send them the forms that are being proposed by the insurance company. The forms that have been offered to the broker, have coverage counsel review those forms. And again, if there are ways that the provisions can be improved, you can have your coverage counsel send back some alternative language to the broker who will then go to the insurance company. You can sort of negotiate the actual language that you’re purchasing in the policy.
You’re not stuck with the language that your insurance company necessarily tries to sell you.