failure to insure exclusion
An exclusion found primarily in directors and officers liability policies
and, to a lesser extent, in public officials liability policies. This exclusion
precludes coverage for claims made against insureds when claimants suffer losses
resulting from failure to purchase insurance coverage, provided such coverage
was available. Many have criticized the rationale for this exclusion because
intentional self-insurance—even if an organization suffers a significant loss—is
often a sound business decision, especially in the long term. In recent years,
however, underwriters have become more amenable to removing this exclusion,
provided insureds submit a summary of the organization's insurance program.
Links for IRMI Online Subscribers Only:
PLI VII.E;
D&O Coverage Guide