PlumBot: Bot: Creating new article from JSON

2026-03-11T04:49:48Z

Bot: Creating new article from JSON

New page

🏢 '''Entity coverage''' is a form of [[Definition:Insurance policy | insurance protection]] that extends to an organization itself — the corporate entity — rather than solely to the individuals who serve as its directors, officers, or employees. In a typical [[Definition:Directors and officers insurance (D&O) | directors and officers (D&O)]] policy, entity coverage (often labeled "Side C" or "entity securities coverage") pays for [[Definition:Insurance claim | claims]] and [[Definition:Defense costs | defense costs]] when the company is named as a defendant alongside or independent of individual insureds. This distinction matters enormously in [[Definition:Securities litigation | securities class-action lawsuits]], where plaintiffs routinely name the corporation as a co-defendant and the resulting settlements can dwarf the amounts attributed to individual officers.

⚙️ Under a standard D&O program, Side A responds when the entity cannot or will not [[Definition:Indemnification | indemnify]] its directors and officers, and Side B reimburses the entity for indemnification payments it makes on behalf of those individuals. Side C — the entity coverage layer — goes further by covering the organization's own liability exposure. Insurers typically structure entity coverage with its own [[Definition:Aggregate limit | aggregate limit]] or sublimit to prevent it from consuming the full policy tower, since entity-level settlements in securities cases can reach hundreds of millions of dollars. [[Definition:Underwriting | Underwriters]] price this coverage by scrutinizing the company's [[Definition:Market capitalization | market capitalization]], stock volatility, regulatory environment, and litigation history.

💡 Without entity coverage, a corporation facing a securities fraud allegation would need to fund its own defense and any resulting settlement from its balance sheet, potentially jeopardizing [[Definition:Policyholder surplus | surplus]] levels and even threatening solvency in extreme scenarios. For publicly traded [[Definition:Insurance carrier | insurers]] themselves — who are just as susceptible to shareholder lawsuits as any other public company — entity coverage within their own D&O tower is a critical piece of their [[Definition:Risk management | risk management]] architecture. Boards and [[Definition:Chief risk officer (CRO) | chief risk officers]] increasingly insist on dedicated entity-coverage limits to ensure that corporate exposures do not erode the protections available to individual directors and officers.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Directors and officers insurance (D&O)]]
* [[Definition:Side A coverage]]
* [[Definition:Securities litigation]]
* [[Definition:Indemnification]]
* [[Definition:Corporate governance]]
* [[Definition:Excess liability insurance]]
{{Div col end}}

Definition:Entity coverage - Revision history

PlumBot: Bot: Creating new article from JSON