In a prior post in which I discussed the “basic value proposition” of D&O insurance, I noted that among the five indispensable elements required in order for coverage under a D&O insurance policy to exist is the requirement that the individual seeking coverage must have been acting in an Insured Capacity. The prerequisite that the Insured Person must have been acting in an Insured Capacity at the time of the alleged Wrongful Act arises from the fact that individuals act in a number of different capacities; it is only conduct undertaken in their capacity as an officer or director of the insured company for which the insurance policy provides coverage.
A July 3, 2021 decision by Southern District of New York Judge Gregory H. Woods, applying New York law, provides a good illustration of how individuals may be acting in multiple capacities, and underscores the fact that while the insurance under a D&O policy is only available when the insured is acting in his or her capacity as a director or officer of the insured company, coverage is not entirely precluded if the individual is acting in dual or multiple capacities. A copy of the Judge Woods’s opinion can be found here.
Continue Reading Individuals Acting in Multiple Capacities Entitled to Defense for Acts Undertaken in Insured Capacity