Side B Coverage (D&O)

Side B Coverage repays the company for amounts it pays to indemnify directors and officers against covered claims. Most Australian company constitutions require the company to indemnify directors and officers to the fullest extent the law allows. This creates a large potential cost for the company. Side B turns that cost into an insurable risk, by repaying the company for defence costs, settlements, and judgments paid on behalf of insured people. Unlike Side A, which protects individuals, Side B protects the company's balance sheet. One key technical point: severability provisions stop one insured person's knowledge from being attributed to another. But for Side B, the knowledge of senior executives, typically the CEO, CFO, General Counsel, and Risk Manager, can still be imputed to the company. This stops the company claiming ignorance of matters its own leaders knew about when it seeks reimbursement. Side B usually shares its limit with Side A.

Side B Coverage repays the company for amounts it pays to indemnify directors and officers against covered claims. Most Australian company constitutions require the company to indemnify directors and officers to the fullest extent the law allows. This creates a large potential cost for the company. Side B turns that cost into an insurable risk, by repaying the company for defence costs, settlements, and judgments paid on behalf of insured people. Unlike Side A, which protects individuals, Side B protects the company's balance sheet. One key technical point: severability provisions stop one insured person's knowledge from being attributed to another. But for Side B, the knowledge of senior executives, typically the CEO, CFO, General Counsel, and Risk Manager, can still be imputed to the company. This stops the company claiming ignorance of matters its own leaders knew about when it seeks reimbursement. Side B usually shares its limit with Side A.