Here's an article on a type of coverage I had never heard of: independent director liability, or IDL coverage.
This supplements directors and officers (D&O) coverage. My first thought was why such supplemental coverage would be necessary; why not just purchase higher policy limits on D&O coverage. The reason is given at the end of the article: IDL coverage provides peace of mind for outside directors. If a D&O policy is depleted by an Enron-type meltdown, the directors will still have coverage.
If I were an insurance agent or a risk manager I would need to take a hard look at both the D&O coverages and the proposed IDL coverage before I would make a recommendation about whether a corporation should buy the IDL coverage. But, as the article points out, if I were an outside director (who wasn't paying for the policy from my own funds), of course I'd want it because, hey, why not.
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Another good reason for a director to consider IDL: it typcially does not cover the acts or omissions of the company or the wrongful acts of insiders. So the IDL limits are not sapped by corporate liabilities like standard D&O coverage. IDL policies are also usually marketed as nonrescindable, which could also be a good feature for directors.
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