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.

A recent decision out of the District of North Dakota and applying North Dakota law illustrates the coverage-determinative importance of the question of capacity. In an October 3, 2017 opinion (here), District of North Dakota Judge Daniel Hovland held that because the allegations against the individual who was seeking coverage did not involve alleged actions undertaken in an insured capacity, the individual was not entitled to coverage under the policy. The ruling underscores the importance of capacity issues and also highlights how challenging these issues can sometimes be when individuals are acting in multiple capacities.     
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