Side C Coverage

Side C Coverage, also known as entity coverage or entity securities coverage, is a component of Directors and Officers Liability Insurance that protects the business entity itself (the company) by covering legal expenses and damages resulting from certain claims or lawsuits brought directly against the organization as opposed to individual directors or officers.

Example #1

For instance, if a shareholder lawsuit targets the company for alleged securities violations rather than specific individuals, Side C coverage would come into play to cover the costs of defending the company and any resulting settlements.

Example #2

In another scenario, if the company is sued for wrongful termination practices affecting a group of employees, this coverage would provide protection for the entity as a whole.

Misuse

Misusing or neglecting Side C Coverage can leave the business vulnerable to substantial financial losses in cases where the organization itself is named in a lawsuit. Without this coverage, the company would have to bear the legal expenses and any resulting damages, potentially leading to financial hardship or even bankruptcy.

Benefits

Having Side C Coverage ensures that the business entity is protected from legal costs and potential financial liabilities arising from claims made directly against the organization. This coverage can safeguard the company's assets, reputation, and overall financial stability in the face of lawsuits targeting the entity itself.

Conclusion

By understanding the importance of Side C Coverage within Directors and Officers Liability Insurance, businesses can proactively protect themselves from significant financial risks associated with lawsuits targeting the company as a whole. It promotes transparency by ensuring that the organization's interests are safeguarded, aligning with CAP's mission to empower businesses and employees through fair insurance practices.