D & O Insurance

Subscribe to D & O Insurance via RSS

thnkerOne of the frequently recurring D&O insurance coverage issues is the question of whether or not the policyholder provided its insurer with timely notice of claim as required under the policy. This past week several readers sent me a copy of a recent decision in which a federal court denied coverage under a homeowners’ association’s D&O insurance policy because of the association’s untimely notice of claim. In light of the policy language involved, the facts at issue, and the court’s analysis, the court’s decision arguably is unremarkable. However, I found that after I read the decision, I couldn’t stop thinking about what the coverage denial meant for the homeowners’ association and its members. This in turn caused me to reflect upon the problems with late notice coverage disputes in general. After a brief discussion of the recent decision, I have set out below my thoughts about notice defenses.

The decision that triggered these thoughts was Central District of California Judge Jesus G. Bernal’s January 7, 2016 ruling in the coverage action brought by The Citrus Course Homeowners Association (HOA) against its D&O insurer. A copy of Judge Bernal’s decision can be found here.
Continue Reading D&O Insurance: Meditations on Late Notice

Fourth CircuitIn a December 30, 2015 unpublished per curiam opinion, the Fourth Circuit affirmed the district court’s holding that a 2010 lawsuit filed to enforce a judgment was interrelated with the 2006 lawsuit in which the judgment had been entered, and therefore because the later was deemed first made at the time of the earlier lawsuit, the later suit was not covered under the management liability insurance policy in force when the later lawsuit was filed. The Fourth Circuit’s analysis is interesting in light of other recent appellate case law decisions interpreting D&O insurance policy’s interrelatedness provisions. A copy of the Fourth Circuit’s opinion can be found here.
Continue Reading D&O Insurance: Subsequent Claim Interrelated With Prior Lawsuit Not Covered Under Policy in Force at Time of Later Claim

Monteleone-Joe11
Joseph P. Monteleone

Among the perennial coverage issues arising under D&O and E&O policies are questions involving timely notice of claim. Recently, the notice provisions many professional liability insurance policies relating to notice timeliness have been revised to lengthen the time period within which notice must be given and even specifying that if in order to assert late notice of claim, an insurer must demonstrate that it has been prejudiced by the late provision of notice. In the following guest post, industry veteran and well-known insurer-side coverage attorney Joseph P. Monteleone of the Rivkin Radler law firm takes a look at these policy wording changes as well as the case law context within which these changes have arisen.

I would like to thank Joe for his willingness to publish his article on this blog. I welcome guest post submissions from responsible authors on topics of interest to readers of this site. Please contact me directly if you are interested in submitting a guest blog post. Here is Joe’s guest post.

*************************

One of the hallmarks of a claims-made and reported policy historically has been the two-pronged requirement that (1) the claim against the insured must be first made during the policy period, and (2) the claim had to be reported to the insurer, if not strictly within the policy period, at least no later than a “bright line” cut-off date after policy expiration.  These cut-off dates were generally thirty (30) or sixty (60) after policy expiration.

Contrast these with so-called pure claims-made policies, which have the first of the two-pronged component discussed above, but the reporting requirement is typically “as soon as practicable”[i], similar to reporting requirements under occurrence-triggered policies such as the Commercial General Liability (CGL) policy.

As part of the inexorable trend of policy wordings becoming ever broader for the benefit of the policyholder, notwithstanding any hardening or softening of rates for the policies, we have seen significant modifications to the policy reporting provisions.

Continue Reading Guest Post: Notice-Prejudice Requirements in D&O Policies: Diverse Trends in Contract Language and Case Law

Mike%20Biles[1]
Michael J. Biles

Just about every publicly traded company and most private companies carry D&O insurance. It is just common sense in the current litigious environment. But while most companies recognize the need for D&O insurance, not every company maximizes its investment when purchasing the insurance. In the following guest post, Michael J. Biles, a partner in the Securities Litigation Group at King & Spalding LLP, takes a look based on his perspective as a securities litigator at ten common mistakes many companies make when buying their D&O insurance. In addition to the points Mike makes in his guest post, I would add that companies are likely to avoid these and other common mistakes if they take the time to ensure that the have enlisted the assistance of a knowledgeable and experienced broker in connection with their purchase of D&O insurance. 

.
I would like to thank Mike for his willingness to publish his article on this site. I welcome guest post submissions from responsible authors on topics of interest to readers of the blog. Please contact me directly if you would like to submit a guest post. Here is Mike’s guest post.

************************************************* 

D&O insurance is a must-have for every public company.  The risks and costs of private lawsuits or government investigations are too great for any rational person to serve as an officer or director of a company without a solid D&O insurance policy.  After nearly twenty years of defending officers and directors in securities litigation, I have experienced firsthand the hardship caused by inadequate or inappropriate D&O insurance.  Contrary to public perception, most officers and directors of public companies are not extraordinarily wealthy – the cost of financing the defense of a securities class action, derivative lawsuit or government litigation (much less of funding a settlement) is too great to bear for most individuals without D&O insurance.

The following are the top ten mistakes that I’ve seen companies make in selecting D&O insurance.  Although some of these mistakes concern complex insurance coverage issues, I’ve prepared this article for the non-lawyer, stripped of legalese, so that officers and directors can discuss these issues with their insurance brokers to avoid these mistakes.  D&O insurance is a competitive industry.  While the core language of a standard D&O policy is generally fixed, companies can, and often do, negotiate better terms in endorsements to the policy. 
Continue Reading Guest Post: Ten Mistakes Companies Make When Buying D&O Insurance –A Securities Litigator’s Perspective

eleventh cuircuit sealIn an unpublished October 5, 2015 opinion (here), the Eleventh Circuit, applying Florida law, held that a D&O insurance policy’s contractual liability exclusion precluded coverage for negligence claims asserted against persons insured under the policy. The contract exclusion was written with a broad “based upon, arising out of” preamble wording. As discussed below, the decision highlights concerns about the use of the broad preamble in D&O insurance policies’ contractual liability exclusion. An October 28, 2015 post on the Wiley Rein law firm’s Executive Summary Blog about the Eleventh Circuit’s ruling can be found here.
Continue Reading D&O Insurance: Contractual Liability Exclusion Applied to Preclude Coverage for Negligence Claim

lawboks2When I started out as a law firm associate doing D&O insurance coverage work more than three decades ago, there was virtually no interpretive case law available. Legal research in connection with D&O insurance tended to be a meagre, frustrating process. Things have changed so much in the interim that now we can have two appellate decisions from two different federal circuit courts on D&O insurance issues in just a single day. On October 21, 2015, both the Second and Fifth Circuits issued D&O insurance coverage rulings, in both cases finding that the there was no coverage under the D&O insurance policies involved for the matters in dispute.

The Second Circuit’s October 21, 2015 summary order in Nomura Holding America, Inc. v. Federal Insurance Company can be found here. The Fifth Circuit’s October 21, 2015 opinion in Martin Resource Management Corporation v. Axis Insurance Company can be found here. I discuss the two appellate decisions below.
Continue Reading D&O Insurance: Two Federal Appellate Courts Issue Rulings Confirming Carriers’ Coverage Denials

missAs part of our beat here at the The D&O Diary, we read a lot of judicial opinions. We are quite accustomed to the fact that the case outcomes can be and often are all over the map. Just the same, every now and then we read a decision that really makes us scratch our heads. That was our reaction when we read Southern District of Mississippi Chief Judge Louis Guirola, Jr.’s October 2, 2015 opinion in the Singing River Health Systems case (here), in which Judge Guirola, applying Mississippi law, held that when a fiduciary liability insurer defends its insured under a reservation of rights, the defense expense payments do not erode the policy’s limits of liability. A number of questions and concerns may fairly be raised about this decision, as discussed below. The Traub Lieberman Insurance Law Blog has an October 5, 2015 post about Judge Guirola’s decision, here.
Continue Reading Defense Costs Paid Under Reservation of Rights Do Not Erode Fiduciary Liability Policy’s Limit of Liability?

caliIn an interesting September 30, 2015 opinion, Southern District of California Cynthia Bashant, applying California law, held that a series of HIPAA-related subpoenas that the U.S. Department of Justice served on Millennium Laboratories were not interrelated with prior qui tam lawsuits that had been filed against the company, and held further that coverage under Millennium’s D&O insurance policy for the company’s costs of responding to the subpoenas was not limited by the policy’s $100,000 sublimit for Regulatory Claims. A copy of Judge Bashant’s opinion can be found here.
Continue Reading D&O Insurance: HIPAA Supoenas, Interrelatedness, and Regulatory Claim Sublimits

minnThe Insured vs. Insured Exclusion is a standard D&O insurance policy provision. The exclusion precludes coverage for clams brought by one “Insured Person” against another “Insured Person.” But what happens when the claimants suing an Insured Person include both individuals who are Insured Persons and other individuals who are not? In a September 22, 2015 opinion (here), District of Minnesota Chief Judge John Tunheim, applying Minnesota law, held that where the underlying claim involved a lawsuit by an Insured Person against other Insured Persons, the entire claim was precluded from coverage, even though the claimants in the lawsuit included other plaintiffs who were not Insured Persons.
Continue Reading D&O Insurance: Insured vs. Insured Exclusion Applies Even When Claimants Include Both Insureds and Non-Insureds?

phoneThe Telephone Consumer Protection Act (TCPA) has proven to be a fruitful source of consumer class action litigation. Plaintiffs’ lawyers are attracted by the potentially lucrative recoveries under the statue, and indeed several recent settlements in TCPA class action lawsuits have run into the millions of dollars. The volume of litigation under the statute and the potential damages associated with the claims has inevitably led to insurance coverage questions. In the past, defendants in TCPA lawsuits looked to their Commercial General Liability (CGL) policies for their defense of these kinds of claims. However, CGL carriers increasingly are expressly excluding coverage for TCPA lawsuits, which has led other companies seeking insurance for TCPA claims to look to other coverages for possible insurance protection, including their D&O insurance policies. As discussed below, carriers may contend that standard D&O insurance policy exclusions preclude coverage for these kinds of claims, but courts continue to sort out the issues.
Continue Reading D&O Insurance: The Question of Coverage for TCPA Claims