Additional Limit for Officers
The new policy contains an option to purchase an additional limit applicable only to officers, similar to the additional limit option in the CODA Policy for Independent Directors. The additional limit is excess of all other policies specifically excess of the CODA policy, subject to the DIC features of the CODA policy. A priority of payment provision maximizes the total amount payable under the CODA policy in the event covered Loss is subject to both the standard limit and the additional limit. Insureds can now purchase just the Independent Director limit option, just the officer limit option, or both options.
Separate Retired Director Coverage
CODA now offers a separate multi-year Retired Director policy, which affords run-off coverage for all former Independent Directors of the Company. The new standard CODA policy includes a priority of payment provision which maximizes the total amount payable by CODA under the standard CODA policy and the Retired Director policy in the event Loss is covered under both CODA policies.
Underlying Insurer or Company Failure to Pay Loss
The new Policy changes the requirement that the Company must refuse indemnification and the underlying insurers must wrongfully refuse coverage in order for the Policy to respond in certain situations. The new Policy states that the DIC coverage applies and that Loss is deemed to be non-indemnified by the Company if the underlying insurers or the Company fail to pay the covered Loss within 60 days after the Insureds request that payment. By deleting the requirement that the underlying insurers and the Company must refuse to pay, this change assures coverage exists under the Policy even if the underlying insurers or the Company simply ignore the Insureds’ request for payment.
Application Definition
The new Policy deletes from the definition of Application “supplementary information” since that could include more information than is otherwise expressly incorporated into the definition.
Extradition Costs
The definition of Claim in the new Policy includes an official request for extradition of an Insured, thereby expressly affording coverage for defense costs incurred as a result of such an extradition.
Witness Interviews
The definition of Claim in the new Policy is also amended to include a request by a regulatory, administrative, governmental or similar authority to interview or depose an Insured, even if no demand, proceeding or investigation has been made against the Insured.
Defense Costs
The new Policy confirms in the definition of Defense Costs that coverage includes (i) expenses incurred by Insureds at CODA’s request to assist CODA in investigating the Claim, and (ii) costs assessed against the Insured in the Claim.
Section 11 Loss Insurability
The definition of Loss is amended in the new Policy to expressly recognize that Loss incurred by Insureds due to actual or alleged violations of Section 11 or 12 of the Securities Act of 1933 will not be treated by CODA as uninsurable loss.
For-Profit Outside Positions
The definition of Outside Entity is amended in the new Policy to include not only not-for-profit organizations, but also all for-profit organizations, but only with respect to a director, CEO, president, COO, CFO or EVP of the Company serving in an outside position with the for-profit organization.
Conduct Exclusions
The conduct exclusion is amended in the new Policy in two respects. First, the reference to an arbitration pursuant to Clause 5 of the Policy is deleted, and instead the exclusion is triggered by (i) a final judgment or adjudication in any proceeding other than a proceeding initiated by CODA or (ii) a guilty plea or other written admission under oath by the Insured. This change eliminates the ability of CODA to instigate an arbitration which could be used to trigger the conduct exclusion.
Second, the new language adds a carve-out to the exclusion which allows a majority of disinterested directors of the Parent Company to waive the conduct exclusion for an Insured who enters a guilty plea or other written admission under oath.
Delete Other Insurance and Prior Notice Exclusions
The new Policy deletes the “other insurance” and the “prior notice” exclusions, although the “Other Insurance” provision in the Policy continues to state coverage under the Policy is excess of other valid and collectable insurance.
Bodily Injury/Property Damage Exclusion
The new Policy adds an exception to this exclusion (i.e., affords coverage) for claims against Independent Directors.
Insured v. Insured Exclusion
The new Policy amends this exclusion in two respects.
First, an additional exception is added, which states that the exclusion does not apply to a Claim if independent legal counsel selected by the Company with the prior consent of CODA issues a written opinion that failure of the Company to make the Claim would likely result in liability to one or more Insureds for failure to assert the Claim. In other words, legitimate Claims by the Company against Insureds are covered, but collusive or friendly Claims are not.
Second, the new Policy adds an exception for (i.e., covers) Claims on behalf of the Company which are prosecuted with the assistance or participation of two or more senior executive officers if such assistance or participation by the executive officers is pursuant to or in compliance with a subpoena or legal process. In other words, to trigger the exclusion, such assistance or participation by the executive officers must be voluntary.