D&O Policy vs. Endorsement

[JoAnne Artesani]

curious to hear from those who place D&O coverage on their preference/thoughts about selling the coverage when offered as an endorsement to the GL, versus selling a stand-alone D&O or Management Liability policy, and why?

 

[AZDave]

I don't recall ever seeing D&O being an 'option' on a BOP or GL. Always has been a separate policy. Maybe I just don't have the carriers that offer it in the underlying...

What type of risk or what carrier have you seen D&O as an option on a BOP or GL?

 

[WMSG]

I cannot speak to this from the P/C agent perspective as I am not one. However, I do have experience as "buyer" or insured. I have served and currently on the Board of Trustees/Directors, of a few nonprofits. Being in the "insurance" business, I've always been asked to serve on the committee, or be involved with the various insurance coverage(s).

One national nonprofit had an insurance/risk management consultant retained, and when it came to the D&O coverage, we were presented with two options (actually three). One was for a stand-alone D&O policy. There were two general types. The second option was to get D&O coverage "as part of (one of ) the liability policies" -- I don't remember if it was via endorsement, rider, or what. The third option was to get D&O coverage as part of another liability policy or as part of "professional services" and "management" policy.

I remember being a bit surprised by the options, but even more surprised at the differences. The risk management consultant gave us an incredible education. In short, what it came down to was the none of the options even came close to offering the comprehensive coverage, scope, etc., as the proper, quality, stand-alone D&O policy...and yes, the stand-alone D&O policy was more expensive than any other options...and we as a board gladly paid for it!!! So that's the lay-person's perspective and experience.

 

[JoAnne Artesani]

WMSG, thank you, this was a helpful perspective and coming from the buyers perspective, is always welcome.

AZDave, I've seen the D&O endorsement available on both AmTrust and Nationwide. In reviewing the coverages, they are pretty on par with stand alone policies with the exception that being an endorsement to the GL, the limits are shared with the GL, the D&O does not have its own tower of limits.

 

[WMSG]

You are very welcome JoAnne...I also remember a difference between two types of policies, and how the benefit was accessed. One I believe was a "pool" of money, and included outside or additional legal expenses (outside what legal representation the insurance company arranged and paid for) which were able to come from that pool perhaps. I really don't remember the details. The other type of policy was structured differently, but I don't think legal expenses were included or something else wasn't included.

I just remember two different types and one was distinctly and obviously better than the other.

 

[fed up]

I would always feel more comfortable placing individual policies instead of riders and endorsements. I look at what would happen in the event of a claim. A claim could cause the premium to increase. Would I want the premium for the main policy to increase because of a claim on an endorsement to that policy or would I want to see a premium increase on the individual policy? Would a 3% increase in premium be greater on the main policy or the D&O individual policy?