Although uncommon today, a few policies contain a failure-to-maintain- insurance exclusion with language similar to the following example:

1. The Insurer shall not be liable under any Coverages to make any payment for Loss as a result of a Claim made against an Insured:

(j) alleging, arising out of, based upon, or attributable to any failure or omission by an Insured to obtain, effect or maintain adequate insurance..

Arch 00 ATL0003 00 (04/05)

Some D&O insurers may expand the failure-to-maintain-insurance exclusion to include the additional reference to bonds or suretyship as in the example below:

The insurer shall not be liable to make any payment for Loss resulting from any Claim:

10. based upon, arising out of, directly or indirectly resulting from the failure to effect or maintain any insurance or bond, or to maintain adequate insurance coverages or coverage limits of liability;

Crum & Forester MP424.1 (04/04)

Because bond and suretyship may or may not be considered insurance, such wording is less desirable than language that excludes only insurance. A few insurers may also expand the exclusion to include self-insurance and/or self-insured-retention programs. The reference to self-insurance is highly undesirable, as there is no universally accepted definition of the term self-insurance.

While most D&O insurers no longer include a failure-to-maintain-insurance exclusion in their policy forms, some insurers may include the exclusion via endorsement to the policy. If it is not possible to entirely remove the exclusion, language without the reference to surety and insurance adequacy is preferable. Exclusions that include self-insurance or self-insured retentions are particularly ambiguous and should be avoided.