Side C cover also known as the Cover for Securities Claims against the company.

The main aim of the D&O policy is to cover senior natural persons who manage and set a company's strategy when such persons face claims resulting from the performance of their functions or duties. In other words, the D&O policy covers management mistakes of a company's directors and officers.

➡ But can a D&O policy cover claims against the company itself?

The answer is yes, but only for certain companies and for a specific type of claim.

The companies that fall within this bracket are basically those that have securities (stocks or bonds) listed on a stock exchange and, therefore, are subject to securities legislation.

In those cases, the D&O policy will not only cover the directors and officers, but also the company itself. This “extension” of cover is known as Side C or Cover for Securities Claims against the entity.

➡ But why should an insurance policy that is aimed at covering individuals also cover the company? What’s the point?

The reason is mainly due to the nature of securities claims. In this type of claim, both the D&Os and the company will be named as co-defendants in the corresponding lawsuit, and they will be sued for the exact same thing.

Particularly in the USA, the costs of defending securities claims are very high, and since they involve both the D&O and the company, insurance policies usually cover both of them in order to avoid problems of allocation of those costs between the company (not covered) and D&Os (covered).

If you want to know more about the Side C cover and how it operates, we invite you to follow our Video On-Demand Masterclass, D&O Insurance Cover Fundamentals with Ed Smerdon from Coverage Matters.

https://www.dotraininghub.com/d-o-insurance-coverage-fundamentals