726. Insurance for indemnification of directors and officers.(a) Subject to paragraph (b), a corporation shall have power to purchase and maintain insurance:
(1) To indemnify the corporation for any obligation which it incurs as a result of the indemnification of directors and officers under the provisions of this article, and
(2) To indemnify directors and officers in instances in which they may be indemnified by the corporation under the provisions of this article, and
(3) To indemnify directors and officers in instances in which they may not otherwise be indemnified by the corporation under the provisions of this article provided the contract of insurance covering such directors and officers provides, in a manner acceptable to the superintendent of financial services, for a retention amount and for co-insurance.
(b) No insurance under paragraph (a) may provide for any payment, other than cost of defense, to or on behalf of any director or officer:
(1) if a judgment or other final adjudication adverse to the insured director or officer establishes that his acts of active and deliberate dishonesty were material to the cause of action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled, or
(2) in relation to any risk the insurance of which is prohibited under the insurance law of this state.
(c) Insurance under any or all subparagraphs of paragraph (a) may be included in a single contract or supplement thereto. Retrospective rated contracts are prohibited.
(d) The corporation shall, within the time and to the persons provided in paragraph (c) of section 725 (Other provisions affecting indemnification of directors and officers), mail a statement in respect to any insurance it has purchased or renewed under this section, specifying the insurance carrier, date of the contract, cost of the insurance, corporate positions insured, and a statement explaining all sums, not previously reported in a statement to members, paid under any indemnification insurance contract. Notwithstanding any other provision of law, a cemetery corporation or a religious corporation having members which purchases or renews any insurance under this section after the effective date of the act which added this sentence to this paragraph, which corporation had two hundred fifty or more interments in the calendar year preceding such purchase or renewal, shall mail the statement required by this section to every person to whom a care notice or solicitation for services has been sent during such calendar year and to every person to whom a notice of annual meeting was mailed during such calendar year, but in no event to less than ten per centum of the lot owners of record during such calendar year. Such corporation shall not be required to mail such statement during any subsequent year, unless such corporation elects to mail notices of annual meeting to its members in which event the statement shall be enclosed as provided in clause (iii) of paragraph (c) (3) of section 725 (Other provisions affecting indemnification of directors and officers). A corporation having less than two hundred fifty interments in the calendar year preceding such purchase or renewal shall not be required to mail such statement unless such corporation elects to mail notices of annual meeting to its members in which event the statement shall be enclosed as provided in clause (iii) of paragraph (c) (3) of section 725 (Other provisions affecting indemnification of directors and officers).
(e) This section is the public policy of this state to spread the risk of corporate management, notwithstanding any other general or special law of this state or of any other jurisdiction, including the federal government.
Last modified: February 3, 2019