Glossary – Insurance Coverage Terms

Allocation refers to the process of determining the amount of defense costs and any settlement or judgment which is properly attributable or “allocated” to covered claims against insureds, on the one hand, and uninsured claims against insureds and others, on the other hand. In essence, allocation simply refers to the process of determining the amount of insured loss when that loss is commingled with uninsured loss. The need for allocation arises most frequently under D&O insurance policies which cover claims against D&Os but not claims against the company. Because D&Os and the company are often both sued in the same claim, allocating loss between the D&Os and the company can be difficult and sometime contentious. Several alternative D&O insurance policy provisions are now available to minimize allocation uncertainties and disputes. Some of those alternatives include:

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Dan Bailey
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