Many companies operating on the FinTech spectrum have corporate counsel on staff. Did you know that the legal work of these people is not covered under your General Liability or other insurance? It's not even covered under the D&O (except in rare cases).
The flaw in the Directors and Officers policy is that there is not normally coverage for Professional Services. While the definition of Insured can be amended to include the General Counsel, the definition of Wrongful Act and / or any exclusion for Professional Services needs to be amended as well. Most carriers don't make the change to the Professional Services definition/exclusion. Most polices only add the General Counsel to the definition of Individual Insured. This only solves part of the problem.
While it is true that the company has an obligation to indemnify the individual corporate counsel, the indemnification can fail (either for a public policy reason or because there is no money) and insurance kicks in on a first dollar basis on these situations. When indemnification does apply and is provided, then the policy reimburses the company for satisfying the indemnification obligation. Think of this coverage first as indemnification reimbursement and second as a backstop to indemnification itself.
Employed Lawyers Professional Liability coverage (sometimes called Corporate Counsel Insurance) is typically rated on the number of attorneys and the type of legal work being performed. Polices can start as low as about $2,500 for a $1,000,000 limit and go up from there (sometimes way up). The underwriting process typically includes a fairly innocuous application and a review of the attorney's resume/background/qualifications. There are about ten markets that write this coverage well for private companies and a few more for the publicly traded firms. ACE and AIG are two of our favorites.
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Monica M. Minkel, RPLU, MLIS, cyRM, CPLP has been working exclusively with Directors & Officers Liability, Professional Liability, Cyber Liability and related products for nearly 20 years. She started her interest in finance by loaning money to her mom at age 11 (complete with a loan agreement and competitive interest rate). She is passionate about all things in the financial industry and the way technology is changing the way capital markets function.