Commercial insurance policies often are contractually complex. Many insurance policies include multiple endorsements modifying provisions of the base insurance policy form. Interpreting the way that the various parts of the policy work together is an important part of determining insurance coverage. When it is unclear how the parts relate uncertainty results. In a recent decision,

In the following guest post, Angus Duncan of Willis Towers Watson summarizes the result of the 2021 Willis Towers Watson D&O Liability Survey. I would like to thank Angus for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Angus’s article.
Continue Reading Guest Post: 2021 Willis Towers Watson D&O Liability Survey

As everyone involved in D&O insurance claims knows, there are a number of frequently recurring coverage issues. But while many coverage issues often recur, the applicable legal principles continue to develop and change. There are resources (such as, for example, this blog) where important developments can be tracked, but sometimes what is called for is a single resource that collects the relevant developments in a single place. Fortunately for D&O insurance practitioners, there is resource that does just that. It is the “Directors & Officers Liability Insurance Deskbook” (about which refer here), an American Bar Association publication written by attorneys from the Clyde & Co. law firm and edited by Martin J. O’Leary of Clyde & Co. The book’s recently published Fifth Edition is a timely update. Every D&O liability insurance practitioner and indeed anyone looking for a quick and ready resource on D&O liability insurance coverage issues will welcome this updated edition.
Continue Reading Book Review: Directors & Officers Liability Insurance Deskbook (Fifth Edition)

One of the perennial D&O insurance issues is the question of coverage for costs incurred by the corporate organization in connection with responding to an SEC investigation – what is often referred to as entity investigative cost coverage. These coverage questions are so fraught because of the sheer magnitude of the expense that entities often incur when they find themselves subject to an SEC investigation. In the latest example of this recurring insurance coverage issue, a federal district court has held that the costs the auto rental firm Hertz Global Holdings incurred in connection with an SEC investigation are not covered under its applicable D&O insurance program. The court’s decision illustrates many of the recurring aspects of this frequent insurance coverage issue. Southern District of New York Judge Alison J. Nathan’s March 30, 2021 opinion in the case can be found here.
Continue Reading Formal SEC Investigation not a “Securities Claim” Under D&O Insurance Policy

In a development that undoubtedly will be discussed among D&O insurance professionals for months to come, the Delaware Supreme Court issued an opinion last week in the long-running Dole Foods insurance coverage battle. Many D&O insurance industry observers will not be surprised to learn that the Delaware Court’s opinion is favorable to policyholders. As discussed below, the opinion (and the many rulings in the court below in this dispute) may encourage insurers to consider possible policy wording revisions. A copy of the Delaware Supreme Court’s March 3, 2021 opinion can be found here.
Continue Reading Del. Sup. Ct. Rules for Insureds in Long-Running Dole Foods D&O Insurance Coverage Dispute

As I noted in a recent post (here), a recurring public company D&O insurance coverage issue is whether a claim in which a company is involved qualifies as a “Securities Claim.” This question matters because D&O insurance provides coverage for the corporate entity (as opposed to the insured directors and officers) only for “Securities Claims” as that term is defined in the policy. In a recent decision, a Delaware Superior Court judge concluded that a bankruptcy trustee’s fraudulent transfer claim against Verizon Communications and related entities came within the applicable D&O insurance policy definition of “Securities Claim.” The coverage dispute illustrates the intricate issues that can arise in determining whether a claim qualifies as a “Securities Claim.” A copy of the Court’s February 23, 2021 Opinion can be found here.
Continue Reading D&O Insurance: Bankruptcy Trustee’s Fraudulent Transfer Claim is a “Securities Claim”

Coverage for the corporate entity under public company D&O insurance policies is limited to claims that constitute “Securities Claims” as that term is defined in the policy. A coverage dispute between Calamos Asset Management and its D&O insurer involved the question of whether an underlying breach of fiduciary duty claims alleged in connection with the company’s take-private tender offer meet the policy’s “Securities Claim” definition.

In a February 19, 2021 opinion (here), District of Delaware Judge Maryellen Noreika, applying Delaware law, ruled that the breach of fiduciary duty claims do not fall with the policy’s definition of “Securities Claim” and granted summary judgment for the insurer, largely in reliance on the Delaware Supreme Court’s 2019 decision in the Verizon case, notwithstanding the fact that the definition of the term “Securities Claim” in the Calamos dispute express referred to the “common law,” while the definition in the Verizon dispute did not.
Continue Reading Breach of Fiduciary Duty Claim Not a “Securities Claim” Under D&O Policy

One of the recurring D&O insurance issues is whether an insurer seeking to deny coverage for a claim based on the insured’s late provision of notice must show that the late notice prejudiced the insurer. In the following guest post, Peter Selvin, the chair of the Insurance Coverage and Recovery Department at Ervin Cohen & Jessup LLP, takes a look at a recent federal district court ruling that supports policyholder’s arguments that the notice-prejudice rule applies under certain circumstances. A version of this article previously was published in the LA Daily Journal. I would like to thank Peter for allowing me publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Peter’s article.
Continue Reading Guest Post: New Decision on Late Notice

Most D&O insurance policies specify that the insurer’s advance written consent is required for claim settlement, such consent not to be unreasonably withheld. A frequent insurance coverage battleground issue is whether an insurer’s decision to withhold consent is or is not unreasonable. In the long-running insurance coverage dispute between for-profit education firm Apollo Education Group and its D&O insurer, Apollo contends that the insurer’s refusal to consent to Apollo’s $13.125 settlement of an options backdating-related securities suit was unreasonable. The coverage dispute eventually made its way to the Ninth Circuit, which certified a question of law to the Arizona Supreme Court on the question of the standard of law to be applied to the consent to settlement provision.

In an interesting February 17, 2021 split decision that could have important implications, the Arizona Court held that the objective reasonableness of the insurer’s decision to withhold consent is to be assessed from the perspective of the insurer, not that of the insured. A copy of the Arizona Supreme Court’s opinion can be found here.
Continue Reading Arizona Sup. Ct.: Reasonableness of Insurer’s Refusal to Consent to Settle Determined from Insurer’s Perspective

Commercial enterprises sometimes are organized in complex structures consisting of multiple, legally separate legal entities. The legal separation between the various entities can be significant in a variety of ways. One particular context within which these separate legal identities can be very important is in the D&O insurance context, as the insurance may be structured to apply to specified entities (and therefore not to others).

In the D&O insurance context, the availability of coverage for individual directors or officers may depend on the entity within the structure on whose behalf the individuals were acting – that is, the coverage question will depend on the “capacity” in which the individuals were acting. A recent decision by the New York (New York County) Supreme Court Commercial Division highlights the importance of these capacity issues and underscores that the capacity in which an individual was acting can be coverage determinative. The court’s February 2, 2021 opinion can be found here.
Continue Reading D&O Insurance Coverage Barred for Execs Not Acting in an Insured Capacity