entity coverage

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Public company D&O insurance policies restrict “entity coverage” (that is, coverage for claims directly against the corporate entity, as opposed to those against individual directors and officers) to “Securities Claims.” If a claim against the company is not Securities Claim then there is no coverage for the company’s defense fees, settlements, and judgments. This obviously creates a huge incentive for the companies to try to show that the claims against them are Securities Claims – which, in turn, has spawned a great deal of coverage litigation addressing the question whether or not a particular corporate lawsuit is or not a Securities Claim.

In the latest example of these kinds of coverage disputes, last week the District of Maryland, applying Maryland law, held that an antitrust claim filed against a corporate entity was not a securities claim within the meaning of the applicable policy – not because the antitrust claim was not “Securities Claims,” but rather because the dispute did not involve alleged transactions in the securities of the company or its subsidiaries. The Maryland court’s March 24, 2026, opinion can be found here.Continue Reading D&O Insurance: Not a “Securities Claim” if No Securities of the “Company” Involved

The costs companies incur in responding to an SEC investigation can be substantial. Companies incurring these kinds of costs are sometimes surprised to learn that their D&O insurance policies may not, and likely will not, cover these kinds of costs, at least under most insurer’s base policy forms.

A recent Delaware Superior Court decision involved a company’s attempt to secure coverage for the costs it incurred in responding to an SEC investigation after the company had agreed to toll the statute of limitations. The Court found that while the tolling request was a Claim within the meaning of the company’s policy, it was not a Securities Claim, as would be required in order for the policy’s entity coverage to be triggered. As discussed below, the Court’s decision provides an opportunity to think about the optional entity investigative cost coverage extension. A copy of the Delaware Superior Court’s June 30, 2025, opinion can be found here.Continue Reading D&O Insurance: Tolling Agreement Is a Claim, But Not a Securities Claim

Umesh Pratapa

Many of us have personal checklists that we use when we review D&O insurance policies. In the following guest post, Umesh Pratapa, an independent insurance consultant based in India, shares his checklist of items to look for in D&O insurance policies. Because Umesh works in the Indian insurance market, some of the items may be less relevant in other markets. I appreciate Umesh’s willingness to share his checklist with the readers of this site. By publishing Umesh’s checklist, I hope to encourage others also to share their checklists to post on this site for other readers to benefit from. Umesh published a prior version of this article on his website, here. I would like to thank Umesh for allowing me to publish his article on this site. Here is Umesh’s article.Continue Reading Guest Post: D&O Liability Insurance Policy – Assumed Vs. Available Coverage

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

Privately-held companies, on the one hand, and companies whose shares are public traded, on the other hand, face very different liability exposures. Because of these differences in liability exposures, the directors and officers liability insurance available for these types of entities varies – the D&O insurance form available for private companies is quite a bit different from the D&O insurance form available for public companies. A recent law firm memo took a brief look at the differences between the two forms of coverage. There some important additional considerations, that I discuss below.
Continue Reading Thinking About the Differences Between Private Company and Public Company D&O Insurance

It is not uncommon for companies to add third parties as additional named insureds to their D&O insurance policies. Most of the time that doesn’t cause any problems. However, serious problems can arise in a subsequent claim if a company’s interests and the interests of the additional named insured conflict. At a minimum, in the event of a serious claim, the company and the third party can clash as they compete for the finite proceeds of the insurance policy. In a recent coverage decision, the Delaware Superior Court, applying Delaware law, held that AR Capital, an additional named insured under the D&O insurance program of VEREIT, was entitled to have its costs of defending the underlying claims advanced under the program. The Court’s December 12, 2018 ruling, which can be found here, provides an interesting perspective on additional named insured issues.
Continue Reading D&O Insurance: Additional Named Insured Entitled to Defense Cost Advancement

Francis Kean

Regular readers of this blog know that class action litigation is an important part of the Australian liability environment. Although comparisons between the Australian class action system and the U.S. system are frequent, there are important differences in class action litigation in the two legal systems, particularly with respect to securities class action litigation. In the following guest post, Francis Kean, Executive Director in Willis Towers Watson’s FINEX Global, takes a look at important differences in claims against issuer companies between the two legal systems and the important implications of these differences for purposes of D&O insurance coverage. This guest post is based on Francis’s original post on the Willis Towers Watson Wire blog. I would like to thank Francis for his willingness 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 site’s readers. Please contact me directly if you would like to submit a guest post. Here is Francis’s guest post.
Continue Reading Guest Post: How “Pure Entity” Australian Class Actions have Distorted the D&O Market