Regular readers know that a recurring topic on this site is the question of the proper scope of the contractual liability exclusion found in many professional liability and management liability insurance policies. In prior posts I have argued that insurers sometimes apply the exclusion overly-broadly so as to exclude matters I believe should otherwise be covered under the policy. A recent Delaware Superior Court decision once again considered these issues in the context of an underlying qui tam action alleging violations of federal law. As discussed below, the court concluded that the applicable policy’s contractual liability did not preclude coverage for the underlying claim. A copy of the Delaware Superior Court’s March 12, 2025, opinion in the case can be found here.Continue Reading Del. Court: Contract Exclusion Does Not Preclude Coverage for Qui Tam Action
Regular readers know that a recurring topic I have explored on this site is the scope of the contractual liability exclusion found in many professional liability and management liability insurance policies. In 
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.
A deceased small business owner’s widow sued the business’s two other co-owners for breach of fiduciary duty for failing to apply a life insurance payout to the company to buy out her deceased husband’s shares. The two co-owners submitted the claim to their company’s management liability insurer, which denied coverage for the claim, relying in part on the policy’s contractual liability exclusion. The two co-owners sued the insurer seeking coverage. The district court granted summary judgment for the insurer. On February 19, 2020, the Eighth Circuit, applying Kansas law, affirmed the district court in an opinion that, as discussed below, raises some interesting issues. The Eighth Circuit’s opinion can be found 
In a recent case in the Fifth Circuit, a retail merchant sought to establish that its D&O insurer was required to provide a defense to a data breach-related claim that had been brought against the merchant. The appellate court held that the trial court erred in granting the insurer’s motion for judgment on the pleadings and ruling that the policy’s contractual liability exclusion precluded coverage. The ruling, which suggests at least the possibility of coverage under the D&O policy for at least some of the claims against the merchant, raises a number of important issues, as discussed below. The Fifth Circuit’s June 25, 2018 opinion in the case can be found 
The insurance available under a D&O insurance policy does not protect insured individuals for all of their activities; rather, the policy protects the individuals only for their actions undertaken in their capacities as officer or directors of the insured organization. The policy does not protect the individuals for actions undertaken in their personal capacity or for actions undertaken as a result of their involvement with entities other than the insured organization.