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  • Personal Directors Liability InsuranceFrom Chubb Executive Protection

    Independent Directors Question: Is It Worth the Risk?

    For years, directors have taken comfort in the protection afforded them by a traditional directorsand officers (D&O) liability insurance policy. But in todays world, independent directors arewondering, Is that sufficient? The unprecedented number of corporate scandals, financialrestatements, and bankruptcies has led to the most litigious D&O liability environment in history.In many cases, the financial losses suffered by shareholders and other constituents far exceed thelimits of any D&O liability insurance program. Shareholders who believe they have been wrongedare looking for their own form of justice going after the personal assets of allegedly negligent ordeceitful executives and board members.

    In recent years, insurers expanded D&O liability insurance to cover the corporate entity.Unfortunately, in many cases this entity coverage has eroded or exhausted the limits of liabilityavailable in policies to defend or settle cases on behalf of directors. In bankruptcies, the D&Opolicy with entity coverage often becomes an asset of the bankruptcy estate and is unavailable toprotect the personal assets of independent directors.

    With evolving legislation and stricter corporate governance standards, directors face greater personalliability than ever before. The time has come for directors to take steps to protect themselves withcoverage designed to protect their personal assets.

    C H U B B S A N S W E R : P E R S O N A L D I R E C T O R S L I A B I L I T Y I N S U R A N C E C O V E R A G E

    Fortunately, Chubbs new Personal Directors Liability Insurance policy responds to the need thatlaw-abiding, independent directors have for asset protection should their boards insuranceprotection and indemnification obligations fail to deliver.

    C H U B B E X E C U T I V E P R O T E C T I O N

    Chubb Group of Insurance Companies

  • Personal Directors Liability Insurance Protection Features Include:

    Comprehensive independent directorship coveragePersonal Directors Liability Insurance from Chubb protects theinsured persons personal assets for each independent directorship that he or she chooses to designate for insurancepurposes. During the application process, Chubb gathers information about each directorship that the board memberidentifies to create customized insurance coverage designed to protect the personal interests of the independent director.

    Protection designed solely for the insured personSharing coverage with fellowdirectors and officers or the corporation itself is no longer a concern. ChubbsPersonal Directors Liability Insurance policy provides a dedicated limit to helpprotect the personal assets of the individual.

    Broad definition of directorshipInsured directorships can be at publicly traded,privately owned, or not-for-profit corporations.

    Tailored coverageChubb evaluates the existing D&O liability insurance coveragefor each designated corporation to determine the appropriate coverage and premiumfor each insured directorship.

    Last line of defense protection with no retentionCoverage applies for loss excess of any other insurance andindemnification from any source but before an insured person taps into his or her own assets. This can occur when theunderlying insurance is financially unable to pay, has been rescinded, or coverage is precluded by breach of a non-severablewarranty or is deemed part of the corporations bankruptcy estate and the corporation is unable to indemnify.*

    Drop-down coverageCoverage under Chubbs Personal Directors Liability Insurance policy applies on an excess basisover existing D&O liability insurance coverage that the corporation already owns. But in the event indemnification isunavailable and the underlying D&O liability insurance coverage proves to be uncollectablepossibly because the insureris unable to pay, the coverage was rescinded, a non-severable warranty exclusion is involved on the underlying policy, orthe underlying policy is deemed to be part of a debtors estate by a bankruptcy courtthen Chubbs policy drops down toapply.*

    Freedom to choose defense counselChubbs policy gives the insured director the freedom to choose defense counsel heor she deems to be most qualified.

    Spousal coverage includedChubbs Personal Directors Liability Insurance policy insures executives, as well as theirspouses or domestic partners if they are named as co-defendants.

    Policy limits of up to $10 million are availableLimits apply to each directorship, but an overall aggregate policy limitapplies, not to exceed $10 million in any one policy year.**

    C H U B B C L A I M R E S P O N S E

    Chubb has dedicated examiners available within its Directors and Officers Claims Department to provide claims service to eachinsured independent director whatever the circumstances of any particular suit. Even when our policy will not apply becauseadequate insurance or corporate indemnification still exists, our claims professionals are available to familiarize you with theD&O liability insurance claims process.

  • T H E C H U B B A D VA N TA G E

    Chubbs 30 years of experience insuring directors, commitment to quality underwriting, and reputation for world-class claimsservice cant be matched. Our financial stability and ability to pay claims rate among the best in the insurance industry, asattested by Standard & Poors and A.M. Best Company, the leading insurance rating services. Agents, brokers, and prospectivecustomers often seek our services because our reputation in the market is well known.

    D O N T TA K E A C H A N C E

    If a company goes bankrupt, will its D&O liability insurance coverage protect its directors personal assets? Dont take anychances. For more information about Personal Directors Liability Insurance from Chubb, contact your agent or broker; emailcsi-info@chubb.com; or look on the Internet at http://csi.chubb.com.

    Its Chubb. Or Its Chance.

    * Coverage is subject to the terms and conditions of Chubbs policy. Chubb retains rights of recovery,

    including subrogation.

    ** Our aggregate limit for all Personal Directors Liability Insurance policies covering one board of directors

    will not exceed $100 million. Chubb will track all accumulations.

    I N B A N K R U P T C I E S ,

    the D&O policy with entity coverage

    often becomes an asset of the

    bankruptcy estate and is unavailable

    to protect the personal assets of

    independent directors.

  • For promotional purposes, Chubb refers to the member insurers of the Chubb Group of Insurance Companiesunderwriting coverage: Chubb Insurance Company of Europe, S.A.; Chubb Insurance Company of Australia, Limited;Chubb Indemnity Insurance Company; Chubb Insurance Company of Canada; Chubb Argentina de Seguros, S.A.; Chubbdo Brasil Companhia de Seguros; Chubb de Chile Compaia de Seguros Generales, A.S.; Chubb de Colombia Compaiade Seguros, S.A.; Chubb de Mexico Compaia Afianzadora, S.A. de C.V.; Chubb National Insurance Company; FederalInsurance Company; Great Northern Insurance Company; Northwestern Pacific Indemnity Company; Pacific IndemnityCompany; Vigilant Insurance Company; Executive Risk Indemnity Inc.; Executive Risk Specialty Insurance Company; andQuadrant Indemnity Company. Not all insurers do business in all jurisdictions.

    This literature is descriptive only. Actual coverage is subject to the language of the policies as issued.

    This literature is for informational purposes only. Distribution is limited to licensed surplus lines brokers.

    Form # 14-01-0608 (Ed. 11/02)

    C H U B B E X E C U T I V E P R O T E C T I O N

    Chubb Group of Insurance Companies

    82 Hopmeadow StreetPost Office Box 2002Simsbury, CT 06070-7683

    Phone: 800.432.8168 Fax: 860.408.2002 Web site: http://csi.chubb.comEmail: csi-info@chubb.com

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