CPCU 552 - CHAPTER 7 EXAM QUESTIONS AND
ANSWERS WITH COMPETE SOLUTIONS GRADED A++
LATEST UPDATE
Directors' and officers' (D+O) liability insurance
covers the liability of individual directors and officers for their "wrongful acts" and
reimburses the corporation for its indemnification payments to directors and officers
Fiduciary duty
a legal obligation arising from one's position as a fiduciary
Fiduciary
has legal, but not beneficial, ownership of property; must exercise a high degree of care
for that property on behalf of the beneficial owner
Fiduciary liability insurance
protects the insured company and certain employees against liability for breach of
fiduciary duties related to employee benefit plans
Employment practices liability (EPL) insurance
covers the insured company, its directors and officers, and its employees for liability
arising from wrongful termination, discrimination, and sexual harassment
Derivative suit
brought against D+O by a stockholder on the corporation's behalf
Business judgment rule
, holds that D+O conduct is not negligent if their good faith, discretionary acts fell within
prudent business conduct
Ultra vires
beyond the powers, referring to acts that go beyond a corporation's corporate legal
powers
Nonderivative suit
brought by an entity outside the corporation
Class action
a lawsuit in which one person or a small group of people represents the interests of a
large group (class) of people
Indemnify
means to pay defense and judgment costs for; means to restore an entity to the same
financial condition it had just prior to loss
Exclusive indemnification statutes
authorize indemnification up to the extent provided by the statute
Nonexclusive indemnification statutes
let corporations provide expanded indemnification
Expanded indemnification
provides rights broader than state statutory rights
Individual' or 'direct' coverage
D+O coverage that indemnifies individual directors and officers for losses the
corporation can not or does not indemnify
Corporate reimbursement' coverage
ANSWERS WITH COMPETE SOLUTIONS GRADED A++
LATEST UPDATE
Directors' and officers' (D+O) liability insurance
covers the liability of individual directors and officers for their "wrongful acts" and
reimburses the corporation for its indemnification payments to directors and officers
Fiduciary duty
a legal obligation arising from one's position as a fiduciary
Fiduciary
has legal, but not beneficial, ownership of property; must exercise a high degree of care
for that property on behalf of the beneficial owner
Fiduciary liability insurance
protects the insured company and certain employees against liability for breach of
fiduciary duties related to employee benefit plans
Employment practices liability (EPL) insurance
covers the insured company, its directors and officers, and its employees for liability
arising from wrongful termination, discrimination, and sexual harassment
Derivative suit
brought against D+O by a stockholder on the corporation's behalf
Business judgment rule
, holds that D+O conduct is not negligent if their good faith, discretionary acts fell within
prudent business conduct
Ultra vires
beyond the powers, referring to acts that go beyond a corporation's corporate legal
powers
Nonderivative suit
brought by an entity outside the corporation
Class action
a lawsuit in which one person or a small group of people represents the interests of a
large group (class) of people
Indemnify
means to pay defense and judgment costs for; means to restore an entity to the same
financial condition it had just prior to loss
Exclusive indemnification statutes
authorize indemnification up to the extent provided by the statute
Nonexclusive indemnification statutes
let corporations provide expanded indemnification
Expanded indemnification
provides rights broader than state statutory rights
Individual' or 'direct' coverage
D+O coverage that indemnifies individual directors and officers for losses the
corporation can not or does not indemnify
Corporate reimbursement' coverage
