Legal Exposures
This status means that an organization is exempt from paying federal corporate income tax on income generated from activities that are substantially related to the purposes for which the entity was organized.
What is Federal tax-exempt status?
A legal disagreement between shareholders of a company over a company-related issue.
What is a shareholder dispute?
The first named insured on a policy (name on the declarations page).
Who is the Named Insured?
Personal Asset Protection for D’s & O’s. Insured Person loss (Defensive & Indemnity). Non-indemnifiable by the company.
What is Insured Persons coverage (Side A)?
A written demand for monetary or non-monetary relief (injunctive relief as example, a civil proceeding, a criminal proceeding, or a formal administrative or regulatory proceeding.
What is a claim?
This is a type of security that signifies ownership in a corporation and represents a percentage of ownership of the corporations assets and earnings.
What is stock?
This duty requires directors to act in the best interests of the shareholders and the company, and to conduct business in a manner as an ordinarily prudent person would in similar circumstances.
What is the Duty of Diligence?
The named insured and subsidiaries, includes debtor in possession.
Costs for investigating derivative demands (expenses which may not fall within definition of loss); this is a lower limit of liability.
What is Investigation Expense?
Defense Expenses and money including damages that the Insured is obligated to pay as result of Claim. Most policies include punitive damages coverage if insurable by law. Also includes legal fees and expenses awarded pursuant to a court order or judgment.
What is a loss?
If an insured sells food products they may have to comply with regulatory standards set by this federal agency.
What is the Food and Drug Administration?
The act of publishing, transmitting, distributing, or otherwise publicly circulating an advertisement containing a false claim, or statement, made intentionally (or recklessly) to promote the sale of property, goods, or services
What is false advertising?
An entity controlled by the parent either through stock ownership, through votes on the board of directors, or by a written management agreement -- generally this means they have the ability to control / set that company’s policies and procedures.
What is a subsidiary?
Additional Side A coverage
What is Supplemental Personal Indemnification?
Reasonable and necessary legal fees and expenses - does not include salaries, wages, benefits or overhead of the Insured Organization used in defense of claim.
What are defense expenses?
This Act is to ensure that buyers of securities receive complete and accurate information before they invest in securities.
What is the Federal Securities Act?
This is an area of law where manufacturers, distributors, suppliers, retailers and others can be held responsible to parties who are injured by their products.
What is product liability?
Any natural person who was, is or becomes a duly elected or appointed member of the board of directors, officers (including executive officers) or a functional equivalent if incorporated or domiciled outside the United States, employees.
Who is an Insured Person?
Corporate Reimbursement – Insured organization is beneficiary but to the extent they indemnify D’s & O’s.
What is Insured Organization coverage (Side B)?
Any matter asserted against an Insured Person solely by reason of his or her status as an Insured Person, such as a Director, Officer or employee of the Insured Organization. Any actual or alleged act, error, omission, misstatement, misleading statement or breach of duty by an Insured Person in his or her Outside Position or by the Insured Organization.
What is a wrongful act?
These laws are regulations that promote competition and prevent unfair business practices in the marketplace. They are designed to ensure that businesses compete fairly and that consumers have access to a variety of goods and services at reasonable prices.
What are Anti-Trust laws?
This duty requires the director to place the interests of the company and the shareholders ahead of his or her own interests. The director may not use their position to advance their own interests over those of the company. They may not use information available to them for personal gain or compete against the corporation.
What is the Duty of Loyalty?
Provides coverage for the spouse as a co-defendant due to a wrongful act committed by an insured person.
What is Spousal Coverage?
Coverage for defense and indemnity for the company’s direct losses.
What is Insured Organization coverage (Side C)?
Service by an Insured Person as director, officer, trustee or other position with Outside Entity but only during such time that such service is with the knowledge and consent and was at specific request of the Insured Org
What is an Outside Position?