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As readers know, there has been a wave of business interruption coverage insurance disputes arising out the pandemic. But the business interruption claims are not the only insurance coverage disputes the coronavirus outbreak has caused. An interesting recent D&O insurance-related coverage dispute involves the denial by a D&O insurer of coverage for lawsuits a health industry technology trade association faced following the March 2020 coronavirus outbreak-related cancellation of the association’s annual trade show.

In a recent decision, a federal district court, applying Illinois law, rejected the insurer’s coverage denial, holding that the policy’s professional services exclusion and contract exclusion did not preclude coverage. The court also rejected the insurer’s contention that the damages sought in the underlying litigation represented uninsurable restitution. Northern District of Illinois Judge Robert W. Gettleman’s October 19, 2021 opinion in the case can be found here. A November 1, 2021 post on the Hunton Insurance Recovery Blog about the opinion can be found here.
Continue Reading Court Rejects D&O Insurer’s Coverage Denial for COVID-Related Tradeshow Cancellation Claims

A federal district court, applying Virginia law, has held that the “Bump-Up” exclusion in a D&O insurance policy does not unambiguously apply to preclude coverage for the settlements of underlying actions relating to the 2016 merger of Towers Watson and Willis. The court construed the exclusion narrowly and based on a reasonable interpretation most favorable to the insured, Towers Watson, determined that the settlements  were not excluded from the definition of Loss under the Bump-Up exclusion.  A copy of the court’s October 5, 2021 opinion can be found here.
Continue Reading Court Holds Bump-Up Exclusion Does Not Unambiguously Preclude Coverage

Geoffrey B. Fehling
Michael S. Levine

In the following guest post, Geoffrey B. Fehling and Michael S. Levine review and analyze a September 2, 2021 Fifth Circuit decision in which the appellate court reversed a lower court ruling and held that a D&O insurance policy must cover a settlement related to a social engineering loss. Geoffrey is a counsel in Hunton Andrews Kurth’s Boston office and Michael is a partner in the firm’s Washington, D.C. office. I would like to thank the authors for allowing me to publish their 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 the authors’ article.
Continue Reading Guest Post: 5th Circ.: D&O Insurer Must Cover Firm for Social Engineering Losses Despite Professional Services Exclusion

Sarah M. Abrams, Esq.

As I noted in my recent survey of key directors’ and officers’ liability issues, one of the most significant recent developments in the financial markets has been the meteoric rise of special purpose acquisition companies (SPACs). In the following guest post, Sarah Abrams, Director, Management Liability Claims at Markel, takes a look at the SPAC phenomenon and considers the underwriting implications, particularly with respect to climate tech companies. I would like to thank Sarah for allowing me to publish her article as a guest post on this site. I welcome guest post submission 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 Sarah’s article.
Continue Reading Guest Post: Heating Up: SPAC Climate Tech Companies and Underwriting Considerations

In  a prior post in which I discussed the “basic value proposition” of D&O insurance, I noted that among the five indispensable elements required in order for coverage under a D&O insurance policy to exist is the requirement that the individual seeking coverage must have been acting in an Insured Capacity. The prerequisite that the Insured Person must have been acting in an Insured Capacity at the time of the alleged Wrongful Act arises from the fact that individuals act in a number of different capacities; it is only conduct undertaken in their capacity as an officer or director of the insured company for which the insurance policy provides coverage.

A July 3, 2021 decision by Southern District of New York Judge Gregory H. Woods, applying New York law, provides a good illustration of how individuals may be acting in multiple capacities, and underscores the fact that while the insurance under a D&O policy is only available when the insured is acting in his or her capacity as a director or officer of the insured company, coverage is not entirely precluded if the individual is acting in dual or multiple capacities. A copy of the Judge Woods’s opinion can be found here.
Continue Reading Individuals Acting in Multiple Capacities Entitled to Defense for Acts Undertaken in Insured Capacity

In a June 23, 2021 opinion (here), a Delaware Superior Court Judge held that a subsequent opt-out action is interrelated with the prior securities class action lawsuit; that the opt-out action claim is deemed made at the time of class action suit’s filing; and therefore that the D&O insurers whose policies were in force at the time the opt-out action was filed do not have coverage for the opt-out action. The court’s conclusion that an opt-out action is interrelated with the underlying class action lawsuit arguably is unremarkable, but, as discussed below, there are features of this dispute and of the court’s ruling that make the court’s decision noteworthy.
Continue Reading Opt-Out Action Held Interrelated with Underlying Securities Class Action Suit

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, the Eighth Circuit found that where multiple policy endorsements modified the same policy exclusion, the net effect of the endorsements was ambiguity, resulting in the conclusion that the exclusion did not apply at all. The appellate court’s decision is a cautionary tale for anyone involved in the insurance placement process.
Continue Reading Multiple Endorsements Modifying Same Exclusion Render Policy Ambiguous, Negating Exclusion’s Applicability

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