Directors and Officers (D&Os) of companies in the mining industry can be faced with a wide range of legal exposures arising from their duties to the corporation, and as such, having a Directors & Officers insurance policy in place can help cover financial losses that can arise from a variety of claims.
Insurance protection is provided under the Directors’ and Officers’ liability policy. There are commonly two types of insurance coverage available:
Corporate D&O Policy
This policy provides coverage for the Individual D&Os as well as coverage for the corporation under certain conditions.
Corporate D&O coverage will usually be more expensive than a Side A policy which restricts coverage to just the D&Os. Some corporate D&O’s policies offer an extra limit (typically $1,000,000) for Excess Side A coverage as an extra benefit to the D&Os.
Individual D&O Policy
Commonly referred to as Side-A Coverage, this policy protects only the D&Os and offers no coverage benefit to the corporation.
More typically, the Side A policy is purchased in conjunction with the corporate policy. In this scenario the Side A policy will provide excess coverage above the limits of the corporate policy exclusively for the D&Os, and first dollar coverage to the D&Os in certain situations where the corporate policy does not respond. This in known as “Excess DIC (Difference in Conditions) Coverage”, hence the name “Excess Side A DIC.”
Certain clients are not interested in corporate coverage and are more concerned with protection just for the D&Os. One issue is the concept of sharing the policy limits with the corporation.
What happens if the limits are exhausted or otherwise inadequate? Could a trustee in bankruptcy hold back coverage or claim the proceeds of the policy as benefit to the corporation denying the D&O’s access to the funds?
Individual coverage for the D&Os only referred to as “Side A Coverage” would typically work in much the same fashion as the corporate D&O policy. Terms and conditions would be much the same with the exception of those elements that are applicable to the company.
It is possible to purchase Side A coverage for the entire board, or just certain board members, such as the outside or independent Directors. It is even possible to purchase coverage for a single Director although these policies are quite rare.
Find out more:
This list is not exhaustive and there are a variety of other insurance coverages that Directors and Officers of mining companies need in order to address all the risks they face and prevent losses. Download our free guidebook “Directors' and Officers' Liability Insurance Guide” here to find out how you can protect your company’s assets: