The D&O Side A DIC is a supplementary policy to the company D&O – it also covers financial losses and extends the protection of the insured person and is often misunderstood in practice.
The D&O Side A DIC insurance is a D&O policy which only covers claims against the insured person and for which the insured person is not indemnified by the company with which he is employed or holds a directorship (Side A). The D&O Side A DIC policy does not apply to insured events which are directed against the insured person but for which the company grants indemnification (Side B). Claims against the Company (Side C) are also not covered by D&O Side A DIC.
Corresponding covers are usually taken out as Difference in Conditions (DIC) in addition to the existing directors’ and officers’ liability insurance with a drop-down agreement. This extends the personal insurance cover for non-liable cases, in those areas where Side A DIC offers more insurance cover than the underlying policy.
The D&O Side A DIC policy essentially addresses three important elements:
1) it offers additional insurance capacity (excess capacity) for claims where the insured person does not enjoy indemnification from the company.
2) it closes coverage gaps in the corporate D&O policy (drop down) if the losing insurer refuses benefits covered under the Side A DIC or in the event of insolvency.
3) it often does not include significant exclusions of the underlying policy, such as internal claims (Insured versus Insured / IvI).
Such an additional safety net can often be crucial to attract well-qualified candidates for managerial positions.