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
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.
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.
t 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 
After entity coverage began to be added to the D&O insurance policy a couple of decades ago, a recurring problem in the bankruptcy context was whether or not the D&O policy proceeds were property of the estate under