Archives: D & O Insurance

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D&O Insurance is Important for Private Companies, Too

Executives at companies whose securities are publicly traded typically don’t need to be persuaded that their company needs D&O insurance. They understand that the exposures public companies face make D&O insurance indispensable. However, the view of some private company managers may be different, particularly for officials at companies whose shares are very closely held. These … Continue Reading

Important D&O Insurance Program Structure Concerns

Most D&O insurance buyers understand the critical importance of limits selection – that is, deciding how much insurance to buy. But an equally important question involves the issue of program structure – that is, how the insurance program is put together. Many insurance buyers understand that, in order to be able to purchase an insurance … Continue Reading

In Long-Running Bear Stearns Dispute, N.Y. Court Rejects Insurers’ Remaining Coverage Defenses

In what seems like the culminating trial court clash in the long-running effort of J.P. Morgan, as successor in interest to Bear Stearns, to try to obtain insurance coverage for amounts Bear Stearns paid to settle charges that it had facilitated market timing and late trading, New York (New York County) Supreme Court Judge Charles … Continue Reading

Policyholder Group Supports Appeal Involving Professional Services Exclusion

Regular readers know that one of my hobby-horse issues is what I perceive as insurers’ overbroad application of the professional services exclusion typically found in private company D&O insurance policies, particularly with respect to policyholders in services businesses. Because of this long-standing concern, I was interested to see that a policyholders’ rights group has filed … Continue Reading

D&O Insurance: When Is a Claim a “Securities Claim”?

Public company D&O insurance policies typically provide coverage for the corporate entity only for “Securities Claims.” A recent case in the Delaware Superior Court involved the question of whether a bankruptcy trustee’s claim related to Verizon’s multi-billion dollar spinoff of its electronic directories business was a “Securities Claim.” In an interesting and detailed opinion dated … Continue Reading

D&O Insurance: Prior and Pending Litigation Exclusion Doesn’t Preclude Coverage, Late Notice Does

A recent summary judgment ruling in a D&O insurance coverage lawsuit in the District of Connecticut addressed several potentially preclusive coverage issues. In her February 28, 2017 opinion (here), Judge Vanessa Bryant, applying Connecticut law, ultimately held that coverage for the underlying claim was precluded due to the insured’s late provision of notice of claim, … Continue Reading

D&O Insurance: Convictions, Appeals, and the Conduct Exclusion

Most D&O insurance policies have conduct exclusions precluding coverage for fraudulent, criminal, or willful misconduct. However, mere allegations are insufficient to trigger this exclusion. If allegations alone were enough, then many claims that would otherwise be covered under the policy would be precluded from coverage, because many D&O claims involve allegations of fraudulent, criminal, or … Continue Reading

Fifth Circuit Rejects Hospital’s Argument that Defense Expense Does Not Erode the Limits of Liability

Most management liability insurance policies are written on a defense-costs-inside-the-limits basis, meaning that covered defense costs erode the limits of liability as the expenses are incurred. Though this is a well-established arrangement within the industry for this type of insurance, the erosion of limits by defense expenses sometimes comes as an unwelcome surprise to a … Continue Reading

D&O Insurance: Over Two-Year Notice Delay Does Not Bar Coverage Where Delay Did not Cause Prejudice

As anyone involved in the liability insurance claims knows, late notice of claim is a recurring problem. When policyholders’ notice of claim is late, liability insurers will often contend that the late notice precludes coverage. However, many jurisdictions have a so-called “notice prejudice” rule, specifying that insurers can deny coverage for late notice only if … Continue Reading

Insured vs. Insured Exclusion: No Coverage When Claim Includes Both Non-Insured and Insured Claimants

As I readers of this blog well know, a frequently recurring D&O insurance question is whether or not the policy’s insured vs. insured exclusion operates to preclude coverage. One of the many issues that can arise under the exclusion is whether or not the exclusion precludes coverage if the underlying claim is brought both by … Continue Reading

Eighth Circuit: Insured vs. Insured Exclusion Precludes Coverage for Claims Brought by Both Insured and Non-Insured Persons

You know that the Insured vs. Insured Exclusion is a frequent source of D&O insurance coverage disputes when on consecutive days two federal appellate courts issue opinions interpreting and applying the provision. As I noted yesterday, on January 10, 2017, it was the Ninth Circuit’s turn; the next day, it was the Eighth Circuit’s turn. … Continue Reading

Ninth Circuit: Insured vs. Insured Exclusion Unambiguously Excludes FDIC’s Failed Bank Claims

During the bank failure wave that followed the global financial crisis, one of the recurring questions was whether or not the failed banks’ D&O insurance policies’ insured vs. insured exclusion precluded coverage for the FDIC’s liability claims as receiver for the failed bank against the banks’ former directors and officers . As I noted in … Continue Reading

D&O Insurance: Despite Trial Court “Fraud” Determination, Fraud Exclusion Not Triggered

In an August 27, 2015 post-trial opinion (discussed here), Delaware Vice-Chancellor Travis Laster found that Dole Foods CEO David Murdock, and the company’s General Counsel and Chief Operating Officer, C. Michael Carter, had committed “fraud” in connection with a November 2013 “going private” transaction. However, according to a December 21, 2016 Delaware Superior Court decision … Continue Reading

Ninth Circuit Holds Applicability of Insured vs. Insured Exclusion to FDIC-R Claims to be Ambiguous

During the course of the wave of failed bank litigation following in the wake of the global financial crisis has been a raft of related coverage litigation addressing the question of whether coverage for claims by the FDIC as receiver of the failed bank against the bank’s former directors and officers is precluded by the … Continue Reading

D&O Insurance: Is a Software Audit Demand a “Claim”?

A standard D&O insurance policy provision specifies that the term “Claim” means, in part, a “written demand for monetary damages or non-monetary relief.” A recurring question that arises under this language is: what exactly is “non-monetary relief”?  In a recent case, an Ohio intermediate appellate court considered the question whether a demand for a software … Continue Reading

D&O Insurance: Thinking About Two Relatively Uncommon Exclusions

A couple of items crossed my desk last week that made me think about two exclusions that are sometimes found in D&O insurance policies. In each case, the exclusions, while relatively uncommon, could substantially restrict the insurance coverage available at least in certain circumstances. Precisely because these exclusions are relatively uncommon, it is important to understand the … Continue Reading

D&O Insurance: What is a Claim and When Does Late Notice Defeat Coverage?

Among the key parts of a claims-made insurance policy are its definition of the term “claim” and its provisions specifying the policyholder’s notice of claim obligations. A recent Delaware Superior Court decision by Judge Eric Davis examined both of these basic policy features and considered what is required in order to meet the policy’s claim … Continue Reading

Thinking About Exceptions and Alterations to the Insured vs. Insured Exclusion

Among the terms and conditions typically found in a D&O insurance policy is the so-called “Insured vs. Insured” exclusion, which precludes coverage for claims brought by one insured against another insured. The exclusion often figures in D&O insurance coverage disputes, as I have frequently noted on this blog. While the exclusion broadly precludes coverage for … Continue Reading

D&O Insurance: Consent Judgment Including Covenant Not to Execute Constitutes “Loss”

In order to try to resolve litigation pending against them, policyholders sometimes enter a settlement in which they agree to the entry of a consent judgment against them and to the assignment to the claimants of their rights under their insurance policy, subject to the claimants’ agreement not to execute the judgment against them. The … Continue Reading

No D&O Insurance Coverage for Costs of Responding to Informal SEC Investigation

Among the most frequently recurring D&O insurance coverage issues is the question of the carrier’s obligation to pay for costs incurred in connection with an informal SEC investigation. Indeed over the years, numerous policy revisions have been adopted in various forms by various carriers to address certain aspects of this issue. Yet the issues continue to arise, … Continue Reading
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