In an interesting March 18, 2024, decision, a California federal district court, applying California law, has held that insurance coverage may be available under the D&O liability endorsement to a community association policy for a claim arising from funds misdirected due to fraudulent payment instructions in a spoofed email. The court held that because the non-payment happened due to the association’s treasurer’s alleged negligence, the vendor’s claim for non-payment arose out of “wrongful acts” of the treasurer, and therefore the vendor’s claim triggered coverage. The court’s decision raises some interesting possibilities about the potential for D&O insurance coverage for these kinds of misdirected payment claims, and it also raises interesting possibilities about potential coverage for breach of contract claims.Continue Reading Claim for Nonpayment Due to Payment Instruction Fraud Potentially Covered Under D&O Policy

D&O insurance policies typically extend coverage to “duly elected or appointed” directors and officers. But what happens if the proper election or appointment procedures were not followed yet the individual served as a director anyway? Is that person a “director” for purposes of D&O insurance coverage? How about for purposes of the Insured vs. Insured exclusion? These are the questions that a federal district court, applying Idaho law, addressed in a case involving individuals whose board appointments were procedurally flawed but whose board membership was subsequently ratified by corporate conduct. The court concluded the individuals are “directors” within the meaning of the policy, and so lawsuits brought by the individuals against the company and other board members represent insured vs. insured claims for which coverage is precluded by exclusion. A copy of the court’s March 15, 2024, decision can be found here. (Hat Tip to Paul Curley of the Kaufman, Borgeest, & Ryan law firm for his March 16, 2024 LinkedIn post about the case, here.)Continue Reading Is a Director “Duly Elected or Appointed” If the Election Was Flawed But Later Ratified?

On March 6, 2024, in a decision that has attracted a lot of attention in the business press, the Eastern District of Virginia, applying Virginia law, held that the bump-up exclusion in Towers Watson’s D&O insurance policy precludes coverage for the $90 million paid in settlement of claims relating to the firm’s January 2016 merger with Willis Group Holdings. As discussed below, the court’s ruling highlights recurring issues concerning the wording of the bump-up exclusion. A copy of the March 6, 2024, opinion can be found here.Continue Reading Bump-Up Exclusion Precludes Coverage for Merger-Related Claims Settlement

One of the perennial D&O insurance coverage issues is the question of whether two or more claims are or are not interrelated. Under the operation of provisions typically found in most D&O insurance policies, if two or more claims are interrelated within the meaning of the policy, they are deemed to be a single claim first made when the first of the claims was filed. This seemingly technical determination can have important implications for the determination of which of the two potentially related insurance programs applies to a claim.

These recurring issues arose in connection with a dispute over which of two potentially applicable D&O insurance programs apply to the securities class action lawsuit filed against Alexion Pharmaceuticals. Insurers in the different towers argued over whether an earlier SEC subpoena, issued to Alexion during an earlier policy period, was related to the later securities suit, which was filed during a later period. In an interesting February 15, 2024, opinion (here), Delaware Superior Court Judge Paul R. Wallace, applying Delaware law, held that, despite some overlap, the subpoena and the securities suit were not related.Continue Reading Prior SEC Subpoena and Later Securities Suit Held Not to Be Related

A frequently recurring insurance claims handling challenge is the problem of “too many insureds, not enough insurance.” Different insureds can have competing and even incompatible interest in the limited insurance funds. As a recent insurance coverage dispute in the Southern District of New York showed, these problems are magnified when the competing insureds also have conflicting interests in the underlying claim. Judge Jennifer Rochon’s February 8, 2024, opinion rejecting one insured’s attempt to block the competing demands to the insurance proceeds of another insured can be found here. Paul Curley’s February 11, 2024 LinkedIn post about the decision can be found here.Continue Reading One Insured Can’t Block Insurance for Another Insured’s Settlement Based on Consent Clause

If the underlying insurers have paid their limits, you would generally expect that the next-in-line excess insurer would also have to pay its limit as well for losses within its layer. However, in an appellate decision with what is arguably an unexpected twist, an appellate court has held – in reliance on express policy language – that an upper layer excess carrier is relieved of its obligation to pay because the underlying carriers, all of whom paid their full limit, did not admit liability. The Third Circuit’s January 19, 2024, decision, marked “not precedential,” can be found here. A January 21, 2024, LinkedIn post about the decision by Paul Curley of the Kaufman, Borgeest & Ryan law firm can be found here.Continue Reading Excess D&O Insurance Coverage Barred Because Underlying Insurers Didn’t Admit Liability

Nelson Kefauver

In the following guest post, Nelson Kefauver, Head of Profin Underwriting at Intact Insurance, takes a look at how three frequent industry predictions from the recent past have turned out.  Nelson’s comments are specific to the private and non-profit D&O insurance space and not do not refer to the public company D&O insurance

In the latest installment in its D&O Insurance videos series, London-based insurer RisingEdge, in a panel discussion of D&O insurance experts, examines the five steps in the D&O insurance policy placement, implementation, and deployment process. The panel, which is moderated by RisingEdge CEO Philippe Gouraud, includes Lianne Gras of Howden; Robert Barnes of GAWS in

Public company D&O insurance policies provide entity coverage (that is, insurance for the benefit of the insured organization) only for “Securities Claims.” But what is a “Securities Claim”? That is the question that Delaware’s courts have grappled with in a long-running dispute between the telecommunications company Verizon and its insurers.

The Delaware Superior Court had

Private company management liability insurance policies typically contain certain policy exclusions, including, for example, the Insured v. Insured Exclusion and the Contractual Liability Exclusion. These exclusions often include carve-backs preserving coverage for otherwise excluded claims. While the exclusions and even the carve-backs may be familiar, the way they operate in practice may not be as familiar, particularly the carve-backs. In a recent insurance coverage decision from the District of Massachusetts, applying Massachusetts law, the court considered how common coverage carve-backs operate and interact. Readers may find the way the carve-backs did or did not apply to provide some interesting lessons. A copy of the Court’s November 9, 2023, opinion can be found here.Continue Reading Carve Backs Preserve Coverage for Otherwise Excluded Claims