Organizations can either purchase a Side A policy on its own (a standalone policy) or they can purchase it alongside Sides B and C.
The main benefit of a standalone Side A policy is that you can unlock the benefits of broader coverage, and fewer exclusions, than what is normally contained in a combined ABC policy. This is why you’ll sometimes see Side A policies being referred to as “Difference in Conditions” (DIC) policies.
Organizations will often combine the two together (i.e. have both a standalone Side A policy and a combined ABC policy) to account for the risk of becoming insolvent. Directors and officers who are only entitled to the benefits of an ABC policy may simply find themselves uninsured.
Traditional standalone “Side A” coverage is also useful because it can respond at ‘first dollar’ in some cases. In other words, corporate entities don’t have to rely on Side B and foot the bill of an indemnity and then seek reimbursement, because the insurer will pay costs up front.
Furthermore, if an organization without Side A protection refuses to indemnify a claim, that director or officer would often need to pay what is called a “Side B self-insured retention” before a Side B insurance policy responds. This could exceed millions of dollars in some cases.
An experienced insurance consultant can help your strategy to ensure your organization receives the right level of Side A coverage.