The D&O Diary

The D&O Diary

A PERIODIC JOURNAL CONTAINING ITEMS OF INTEREST FROM THE WORLD OF DIRECTORS & OFFICERS LIABILITY, WITH OCCASIONAL COMMENTARY

Category Archives: D & O Insurance

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D&O Insurance: The Major Shareholder Exclusion

Posted in D & O Insurance
An exclusion sometimes found in D&O insurance policies precludes coverage for claims made by shareholders who have a specified percentage of ownership in the insured company. This type of exclusion is called a Major Shareholder Exclusion (or, sometimes, the Principal Shareholder Exclusion). An interesting May 6, 2015 decision (here) by the Supreme Court of Victoria… Continue Reading

Thinking About Excess D&O Insurance

Posted in D & O Insurance
In many cases, companies’ D&O insurance programs are structured in several layers, with one or more policies of excess of insurance written over top of a primary layer. The excess insurance is often said to be written on a “follow form” basis, meaning that the primary policy’s terms govern the operation of the excess policies.… Continue Reading

U.S. Trade Sanctions and D&O Insurance

Posted in D & O Insurance
As part of its conduct of foreign affairs and of its national security program, the U.S. government has instituted a series of economic and trade sanctions against a number of countries and a long list of designated individuals. The various sanctions programs are administered by the Office of Foreign Asset Control (OFAC) within the U.S… Continue Reading

Indiana Supreme Court: E&O Insurers Must Pay Settlement of Suits Alleging Health Insurer Dodged Medical Claims

Posted in D & O Insurance
On April 22, 2015, in a sweeping win for health insurer Anthem Inc., the Indiana Supreme Court held that excess reinsurers on the company’s self-insured E&O insurance program must pay the company’s costs of defending and settling allegations that it had improperly failed to pay, underpaid, or delayed paying medical reimbursement claims. The Court rejected… Continue Reading

D&O Insurance: Insured That Settled Underlying Claim Without Insurer’s Consent Cannot Sue the Insurer for Breach of Contract or Bad Faith

Posted in D & O Insurance
The Georgia Supreme Court has held that where a policyholder settled an underlying claim without its D&O insurer’s consent, the policyholder cannot sue the carrier for breach of contract or for bad-faith failure to settle. The Court, applying Georgia law, entered its opinion in the case based on questions certified from the United States Court… Continue Reading

Legal Malpractice Insurance: Policy Rescission for Application Misrepresentation Applies Even to Innocent Insured

Posted in D & O Insurance
Under the applicable Illinois statute, an insurer may seek to rescind a policy if it was procured by an application misrepresentation if the misrepresentation was “made with the actual intent to deceive or materially affects either the acceptance of the risk or the hazard assumed by the company.” But even if rescission is otherwise warranted,… Continue Reading

Management Liability Insurance: Who is a “Non-Executive” Director?

Posted in D & O Insurance
Many contemporary management liability insurance policies draw distinctions between types of directors. For example, many private company D&O insurance policies provide additional excess defense expense coverage for the benefit of “non-executive directors.” However, these kinds of provisions beg the question of who exactly is a “non-executive director”? A recent decision by an appellate court in… Continue Reading

Guest Post: Give Notice on Your D&O Claim…Yesterday

Posted in D & O Insurance, Uncategorized
A frequently recurring management liability insurance coverage issue involves the question of whether or not the policyholder has given timely notice as required under the policy, as I have discussed in prior posts on this blog (most recently here). Among the many kinds of notice issues that can arise are questions involving multiple or interrelated… Continue Reading

N.Y. Intermediate App. Ct. Allows D&O Insurers to Assert Public Policy Defense in Long-Running Bear Stearns Coverage Action

Posted in D & O Insurance
In the latest round in the long-running battle over whether there is D&O insurance coverage for the amounts Bear Stearns paid in settlement of an SEC enforcement action for alleged market timing, the D&O insurers may have finally found an issue on which they may be allowed to try to dispute coverage. Even though, in… Continue Reading

Professional Liability Insurance: Two Policies But No Coverage Due to Untimely Notice

Posted in D & O Insurance
In a January 9, 2015 opinion (here), the Eighth Circuit, applying Missouri law, held that there was no coverage under either of two successive professional liability insurance policies issued by the same insurer for a claim against its insured, LSi-Lowry Systems, because the claim was first made before the inception of the second policy and… Continue Reading

D&O Insurance: No Coverage for Enforcement Action Because Claim First Made When SEC Subpoena Served Before Policy Inception

Posted in D & O Insurance
A recurring D&O insurance coverage issue involves the question of whether or not a subpoena constitutes a claim, as I have noted on prior posts (for example, here). When this issue comes up, the dispute is usually over whether or not there is coverage under the policy for the costs of responding to the subpoena… Continue Reading

D&O Insurance: Contract Exclusion Does Not Preclude Coverage for Intentional Misrepresentation Claim

Posted in D & O Insurance
A recurring D&O insurance question is whether or not a policy’s contract exclusion precludes coverage for claims that the insured induced the claimant into entering a contract through negligent or intentional misrepresentations. In a interesting December 22, 2014 opinion (here), District of Rhode Island Judge John J. McConnell, Jr., applying Rhode Island law, held that… Continue Reading

Professional Liability Insurers Must Pay $30 Million Settlement of Restitutionary Overdraft Fee Claims

Posted in D & O Insurance
On December 16, 2014, in an interesting ruling that undoubtedly will stir up a great deal of debate, District of Minnesota Judge Paul Magnuson, applying Delaware law, granted U.S. Bancorp’s motion for summary judgment, holding that the bank’s professional liability insurers must pay $30 million of the $55 million the bank agreed to pay in… Continue Reading

D&O Insurance: Eleventh Circuit Holds Insured v. Insured Exclusion’s Applicability to FDIC Failed Bank Claims Ambiguous

Posted in D & O Insurance
Going all the way back to the S&L crisis, a recurring insurance coverage issue that has arisen in the failed bank context has been the question of whether or not coverage for a claim brought by the FDIC in its capacity as receiver of a failed bank against the failed bank’s former directors and officers… Continue Reading

Q&A with PLUS1 Award Winner Aruno Rajaratnam

Posted in D & O Insurance
On Thursday November 6, 2014, at the Professional Liability Underwriting Society (PLUS) International Conference in Las Vegas, the PLUS1 Award will be conferred on my good friend, Aruno Rajaratnam. The PLUS1 Award is presented annually to a person “whose efforts have contributed substantially to the advancement and image of the professional liability industry.” I can’t… Continue Reading

D&O Insurance: Contractual Liability Exclusion Precludes Coverage for Negligent Misrepresentation Claims

Posted in D & O Insurance
In an October 20, 2014 opinion (here), Middle District of Florida Judge Roy B. Dalton, Jr., applying Florida law, entered summary judgment for a D&O insurer, holding that the insurer was not liable for the stipulated judgment its insured had entered because the policy’s broad contractual liability exclusion precluded coverage for the underlying claims of… Continue Reading

D&O Insurance: Insured vs. Insured Exclusion Applicability to FDIC Failed Bank Claim Held Ambiguous

Posted in D & O Insurance
As I have previously noted on this blog, one of the recurring D&O insurance coverage issues arising during the latest bank failure wave has been the question whether the Insured  vs. Insured Exclusion precludes coverage for claims brought by the FDIC in its capacity as receiver for a failed bank against the failed bank’s former… Continue Reading

D&O Insurance: Prior and Pending Litigation Exclusion Bars Coverage for Lawsuit Filed Years Before But Served During the Current Policy Period

Posted in D & O Insurance
Under which claims made D&O insurance policy is there coverage for a claim that was filed under seal years ago but not served on the policyholder until the policy period of the current policy? If you find the answer “no policy” as unsatisfying as I do, read on. In a September 15, 2014 opinion (here),… Continue Reading

D&O Insurance: Though Specific Litigation Exclusion Does Not Apply, Subsequent Suits Related to Prior Claim Not Covered

Posted in D & O Insurance
As the litigation wave arrived following the global financial crisis, many financial institutions were hit with multiple suits that arrived piecemeal and over time. For D&O insurance coverage purposes, these lawsuits were filed across multiple policy periods. A recurring question as the subprime litigation has worked its way through the system is whether the various… Continue Reading