“Effectively Uninsurable”: Tesla Goes Shopping For D&O Insurance, But Forced To Exclude Elon Musk From Policy
In addition to being the company’s D&O insurance, Elon Musk now appears to be the reason why Tesla can’t get D&O insurance.
Recall, back in April we wrote about (now $300 billion plus) Tesla dropping its D&O insurance and, instead, having Elon Musk personally cover the company.
Now, nearly 6 months later, Tesla is still shopping for D&O insurance but has excluded CEO Elon Musk from its policy, according to Insurance Insider. Tesla is currently “in the market” for a binding quote on a D&O policy with a $100 million aggregate limit, according to the report.
In order to combat the “excessive quotes” the company got in the past (which are what ultimately led Musk to providing insurance to the company personally), the “Marsh JLT Specialty-brokered Tesla policy is currently circulating in the London market” with the one key exemption.
In fact, sources called the CEO “effectively uninsurable” based on his erratic behavior, which notably included a fake $80 billion buyout bid for his company that didn’t exist that ultimately led to allegations of securities fraud with the SEC.
The ironic thing is that Musk is – by far and away – the biggest liability at Tesla. Excluding him from D&O insurance would be akin to excluding arson from fire insurance.
Regardless, D&O insurance is absolutely vital for any public company, but especially for a company that finds itself embroiled in far more controversy and litigation than others. Like a company where the CEO bails out his cousin’s failing solar company. Or a company where the CEO openly and brazenly commits securities fraud on Twitter.
We speculated back in April that nobody wanted to be on the hook for insuring Tesla and it appears we were right; kind of. It appears that no one wants to be on the hook for insuring Musk. But given the company’s massive market cap – which has only grown over the last 5 months – we find it baffling that Tesla doesn’t have the means to pay for insurance including Musk, even if it’s expensive.
Unless, of course, there is simply no offer.