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Major Shareholder Exclusion

Major Shareholder Exclusion

Definition

An exclusion contained in some directors and officers (D&O) liability policies that precludes coverage for claims made by individuals who own a large percentage of the insured entity's stock (typically more than 5 percent to 10 percent). The rationale for the exclusion is that such claims are often the result of infighting or personality conflicts between major shareholders and management rather than being caused by managerial errors involving substantive business decisions.

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