Financially distressed companies often can only obtain D&O insurance coverage on a policy with a bankruptcy or insolvency exclusion precluding coverage for bankruptcy-related claims. The enforcement of these exclusions in the wake of a subsequent bankruptcy can produce harsh results, and insureds often argue that the exclusion does not apply or even that the exclusion
On March 6, 2024, in a decision that has attracted a lot of attention in the business press, the Eastern District of Virginia, applying Virginia law, held that the bump-up exclusion in Towers Watson’s D&O insurance policy precludes coverage for the $90 million paid in settlement of claims relating to the firm’s January 2016 merger with Willis Group Holdings. As discussed below, the court’s ruling highlights recurring issues concerning the wording of the bump-up exclusion. A copy of the March 6, 2024, opinion can be found here.Continue Reading Bump-Up Exclusion Precludes Coverage for Merger-Related Claims Settlement
Public company D&O insurance policies provide entity coverage (that is, insurance for the benefit of the insured organization) only for “Securities Claims.” But what is a “Securities Claim”? That is the question that Delaware’s courts have grappled with in a long-running dispute between the telecommunications company Verizon and its insurers.
The Delaware Superior Court had
For the second time in recent days, a court has held that a D&O insurance policy provision operates to preclude coverage for claims against an insured company and its executives that the consideration to be paid for the acquisition of the insured company is inadequate. The Seventh Circuit in a recent decision held that the “inadequate consideration” exclusion (sometimes referred to as the “bump-up” exclusion) in the applicable D&O insurance precludes coverage for a claim that disclosure in the company’s proxy statement omitted information that could have been used to negotiate a higher price. As discussed below, the policy wording at issue was relevant to the outcome. The Seventh Circuit’s January 23, 2023, opinion in the Komatsu Mining Corp. case can be found here.Continue Reading “Inadequate Consideration” Exclusion Precludes Coverage for Underpayment of Insured Company’s Acquisition
In the following guest post, Peter S. Selvin, a partner with Beverly Hills, California based Ervin, Cohen & Jessup law firm where he chairs the firm’s insurance coverage and recovery practice, reviews two recent case decisions involving the question of whether or not D&O insurance policies apply to provide coverage for consumer protection claims arising from the sale or marketing of products. A version of this article previously published in the Los Angeles Daily Journal. I would like to thank Peter for allowing me 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 blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Peter’s article.
Continue Reading Guest Post: Are Consumer Protection or False Advertising Claims Covered by Insurance?
In the following guest post, the guest authors examine issues relating to the Professional Services Exclusion found in many private company D&O insurance policies. This article was co-authored by Matthew Schweiger, AVP Claims, D&O Management Professional Liability, Core Specialty, Jerry Grenon, AVP, Management and Professional Liability, Core Specialty, Elan Kandel, Member, Bailey Cavalieri LLC and James Young, Of Counsel, Bailey Cavalieri LLC. I would like to thank the authors for allowing me to publish their 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 the authors’ article.
Continue Reading Guest Post: Professional Services: Where Do You Draw the Line?
As I have noted in prior posts on this site, the surge in special purpose acquisition corporation (SPAC) IPO transactions over the last two years has also meant a wave of SPAC-related lawsuits. In the following guest post, Peter Evans, Complex Claims Director – Executive & Professional Lines, Berkshire Hathaway Specialty Insurance, Elan Kandel, Member, Bailey Cavalieri LLC and James Talbert, Associate, Bailey Cavalieri LLC, take a look at SPACs and the litigation risks that SPAC sponsors can face, as well as the insurance issues that can arise in claims involving SPAC sponsors. I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
Continue Reading Guest Post: Litigation Risks and Insurance Issues for SPAC Sponsors
In the following guest, Yaminah Williams, Assistant Vice President, Hiscox USA, Alicia Garcia, Claims Counsel, Hiscox USA, Katherine Hausmann, Senior Complex Claims Specialist, Hiscox USA, Elan Kandel, Member, Bailey Cavalieri LLC and James Talbert, Associate, Bailey Cavalieri LLC, review the key 2001 D&O insurance coverage decisions. I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
Continue Reading Guest Post: The Year in Review: 2021 Key D&O Insurance Coverage Decisions
The Insured vs. Insured exclusion is one of the standard exclusions in D&O insurance policies (although these days at least in public company D&O insurance policies, the exclusion is framed as an Entity vs. Insured exclusion). Disputes often arise with respect to the Insured vs. Insured exclusion. In the following guest post, Ivan Rodriguez, Underwriting Lead with CelerityPro, Elan Kandel, Member, Bailey Cavalieri LLC and James Talbert, Associate, Bailey Cavalieri LLC, take a look at a situation that frequently results in Insured vs. Insured coverage disputes – that is, so-called “mixed” actions, in which the plaintiffs include both insured and uninsured persons. I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
Continue Reading Guest Post: Divergent Trends Regarding Application of the Insured vs. Insured Exclusion for Mixed Actions
In a November 30, 2021 opinion (here), a Delaware Superior Court judge, applying Delaware law, held that the later investigations of the insured policyholder by two regulatory agencies were unrelated to an earlier investigation of the company by one of the agencies. In making this “relatedness” determination, the court declined to apply the “fundamentally identical” standard that some Delaware courts have applied to relatedness issues, but instead applied a “meaningful linkage” test. Because relatedness disputes are so frequent, and because Delaware’s court increasingly are becoming the forum in which insurance disputes are addressed, this court’s adoption of the revised relatedness standard court have important implications.
Continue Reading D&O Insurance: Delaware Court Applied “Meaningful Linkage” Interrelated Claims Test