A great deal of premium exchanges hands to buy the Difference in Condition (DIC) or “drop-down” component of excess Side A DIC coverage. Yet policyholders, brokers, and to a large extent, D&O liability carriers, have surprisingly little understanding of just how that standard coverage feature is triggered—or how it works in practice. Recent experience with the drop-down provision suggests that it can be a highly valuable tool to help resolve disputes in which one or more carriers is refusing to meet its coverage obligations. But triggering the coverage is fraught with difficulties.

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