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RPLU 8 - Directors & Officers Intro Exam | Questions and Answers Verified 100% Correct
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RPLU 8 - Directors & Officers Intro Exam | Questions and Answers Verified 100% Correct
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RPLU 8 - Directors & Officers Intro Exam |Questions and Answers Verified 100% Correct
Duty to Defend - ✔✔The insurer's obligation to appoint counsel and defend against a claim
Duty to Pay - ✔✔The insurer's obligation to pay the cost of the insured's defense but not to
control the defense
Endorsement - ✔✔A written document attached to the original policy that may add to,
delete or modify the provisions of the original insurance policy. Also called a rider
Entity Coverage or Side C Coverage - ✔✔The coverage in a D&O policy that pays for defense
costs, settlements and judgments for securities claims (and possibly other claims) filed against
the organization even if the directors and officers are not named in the action or lawsuit
Excess Insurance - ✔✔A type of insurance that protects against catastrophic losses, that
provides higher liability limits over an underlying primary policy or self-insured retention, and
that covers losses in excess of the primary policy's liability limits or the self-insured retention
Extended Reporting Period - ✔✔An extension of the claims reporting provisions for a specific
time period beyond the policy expiration date for any claims arising from incidents that
occurred after the retroactive date and before the expiration of a claims-made policy. Also
called Tail Coverage
Fiduciary - ✔✔A person or institution who manages money or property for another and who
must exercise the standard of care imposed by the law
Form 8-K - ✔✔A report filed with the SEC during a fiscal year that presents a change of some
significance
,Fraud - ✔✔The intentional use of deceit, a trick or dishonest means to deprive another of
money, property or a legal right
Indemnification - ✔✔The compensation for a loss. Organizations indemnify directors and
officers for defense cost, settlements and judgments based on state statutes and the
organization's articles of incorporation
Jurisdiction - ✔✔The legal authority given to a court to try cases and rule on legal matters
within a particular geographic area and/or over certain types of legal cases
Material Information - ✔✔Information that is relevant and significant; distinguished from
the information that is irrelevant or of minor importance
Negligence - ✔✔A type of tort that occurs when a professional fails to meet the standard of
care required of someone in that profession, under similar circumstances and that causes the
plaintiff to suffer injury or damages proximately caused by the professional's breach of duty
Monitoring/Coverage Counsel - ✔✔The insurer's counsel who monitors the litigation, who
advises the insurer on policy coverage and obligations and who may work with the insured's
counsel to achieve more cost-effective litigation and settlement
Nonprofit Organization - ✔✔An organization (1) that is incorporated under state laws and
approved by both the state's Secretary of State and the state's taxing authority and (2) that
operates for education, charitable, social, religious, civic or humanitarian purposes
Notice of Circumstances - ✔✔The notice the insured gives to the insurer of facts or
circumstances that may give rise to a future claim. Any future claim that results will be treated
as a claim made during the current policy period
Occurrence - ✔✔An accident, including continuous or repeated exposure to substantially the
general harmful condition
, Officer - ✔✔A high-level management official of a corporation or an unincorporated
business, hired by the corporation's Board of Directors or the business' owner, such as a
president, vice president, secretary, financial officer, or chief executive officer
Presumptive Indemnification - ✔✔A clause in a D&O policy confirming that the insurer
presumes that if there is a claim, the insured will indemnify the director and officers to the
fullest extent allowed by law.
Private Organization or Company - ✔✔A for-profit company whose shares are not publicly
traded and which has a limited number of, or no, shareholders
Prospectus - ✔✔A disclosure document a company prepares and distributes in connection
with its offer to sell stocks or other securities
Public Corporation - ✔✔An organization that (1) is formed with state governmental approval
to act as an artificial person to conduct business (or other activities); (2) can sue or be sued; and
(3) unless it is a non-profit, issues shares of stock to raise funds to start its business or increase
its capital
Punitive - ✔✔The damages awarded in a lawsuit as a punishment and example to others for
malicious, evil, or particularly fraudulent acts
Recklessness - ✔✔A degree of fault that involves the conscious and willful disregard for
others in an action that increases the danger posed by an act that subsequently occurs
Recission - ✔✔The cancellation of a policy or contract that restores the parties to their
positions prior to the contract
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