Exam DISC-IA Practice Question 212
Study guide: Exam DISC-IA
A company has filed for bankruptcy and cannot indemnify its former directors. Creditors sue the directors personally, alleging they misled lenders about the company's finances, and $800,000 of defense costs are incurred before any finding of fraud. The company's D&O policy has a $10,000,000 limit, a $500,000 Side B retention and a $1,000,000 Side C retention. Under which part of the policy are the directors' defense costs paid, and how much does the insurer pay toward them?
- A) Side A, paying the full $800,000 with no retention
- B) Side B, paying $300,000 after the $500,000 retention
- C) Side C, paying nothing because the costs are below its retention
- D) None, because fraud is alleged and the conduct exclusion applies
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