D&O insurance provides coverage for individuals to the extent they are acting in their capacities as directors and officers of their companies. The policies do not provide coverage when the individuals are acting in other capacities. A recent decision from a New Jersey appellate court highlights the coverage questions that can arise when individuals are alleged to be acting in multiple capacities. The court concluded that coverage was entirely precluded for an individual who was acting multiple capacities. As discussed below, the decision raises interesting questions. Continue Reading D&O Insurance Coverage Precluded for Individual Acting in Dual Capacities
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.
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Regular readers of this blog know that I have been following the developing SPAC-related litigation closely. Readers also know that the cast of defendants in these cases can be extensive, diverse, and in some cases overlapping. For example, the defendants may include former directors and officers of the SPAC; former directors and officers of the acquired company; and current directors and officers of the company formed by the merger. Some of the individuals named may be sued in more than one capacity. These features of the suits will complicate the litigation. These features will also complicate the application of insurance to the defense and settlement of this litigation, as well.
Commercial enterprises sometimes are organized in complex structures consisting of multiple, legally separate legal entities. The legal separation between the various entities can be significant in a variety of ways. One particular context within which these separate legal identities can be very important is in the D&O insurance context, as the insurance may be structured to apply to specified entities (and therefore not to others).
As readers know, directors and officers of both public and private companies face a number of sources of potential liability exposure that can in turn learn to claims against them. One area of potential D&O claims exposure that may not always be considered is the possibility that the individuals could face claims brought against them by their own company, as happened, for example, in the lawsuit that 
In an interesting decision that touches on a number of basic D&O insurance coverage issues, a federal district court judge applying Oklahoma law has ruled that a company’s management liability insurance policy does not provide coverage for legal expenses a former company executive incurred in a declaratory judgment action that had been filed by another company executive to determine the parties’ rights under a profit sharing agreement. The court concluded that there was no coverage because the individual seeking coverage had not been named as a defendant in the lawsuit by reason of his status as an insured person. Even more interestingly, the court concluded further that, even though the individual had been named as a defendant in the declaratory judgment lawsuit, he had not incurred “Defense Expenses” in the lawsuit, and therefore suffered no “Loss.” Western District of Oklahoma Judge 
In the following guest post, Alison Finn, Claims Counsel, DWF Claims; Elan Kandel, Member, Bailey Cavalieri; and James Talbert, Associate, Bailey Cavalieri, take a look at the most important management and professional liability coverage decisions for 2019, involving the perennial coverage issues for insurers and policyholders. I would like to thank Alison, Elan, and James 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.
One of the basic requirements in order for coverage to be triggered under a directors’ and officers’ liability insurance policy is that the misconduct alleged must have been undertaken by insured individuals in an “insured capacity” – that is, in their capacities as directors or officers of the insured entity. In a recent insurance coverage ruling, the Delaware Superior Court held that because the allegations against the insured individuals “arose out of” their involvement with entities other than the insured entity, there was no coverage for the individuals under their bankrupt company’s D&O insurance policy. The ruling underscores the importance of capacity issues in determining D&O insurance coverage and highlights the ways in which allegations of misconduct undertaken in multiple capacities can lead to complicated coverage questions. The Delaware Superior Court’s November 30, 2018 decision can be found 
One of the key elements to establish coverage under a directors and officers insurance policy is the existence of claim is for actions undertaken by an insured individual in an insured capacity – that is, in his or her capacity as a director or officer of the company. Things in life are never simple, and lawsuits often allege that corporate director or officer defendants were acting in multiple capacities – that is, both in their capacity as a director or officer and in other capacities as well. These multiple capacity claims often present policy interpretation and coverage issues under D&O insurance policies.