professional liability insurance

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One issue courts often confront is the question of what they may properly consider in determining whether or not an insurer has a duty to defend an insured in a given set of circumstances. In many jurisdictions, the courts may consider only the underlying complaint and the terms and conditions of the policy, and nothing else. In a recent decision, an Illinois intermediate appellate court, applying Illinois law, held that the trial court properly considered extrinsic matter – in this case, the insured’s description of events in his notice of claim to the insurer—in holding that the policy’s Cyber Events exclusion precluded coverage, even though the underlying complaint did not refer to the cybersecurity incident. The court’s decision raises some interesting questions, as discussed below.Continue Reading May a Court Consider Extrinsic Matter in Determining an Insurer’s Duty to Defend?

In an insurance coverage dispute arising out of an unusual underlying criminal proceeding, the Fourth Circuit Court of Appeals, applying Maryland law, has held that a Maryland attorney indicted for his alleged actions on behalf of certain Somalian entities is not entitled to insurance for his fees incurred in defending against the indictment. The Court’s decision raises interesting issues about the applicable professional liability insurance policy’s definition of Claim and the definition’s application in the context of the attorney’s criminal proceedings. A copy of the Fourth Circuit’s January 4, 2024 opinion can be found here.Continue Reading Attorney’s Post-Indictment Defense Fees Not Covered Under Professional Liability Policy

Sarah Abrams

Steven Kane

In the following guest post, Sarah Abrams, Head of Professional Liability Claims Bowhead Specialty Underwriters, Inc., and Steven Kane, Head of Financial Institutions Underwriting, Bowhead Specialty Underwriters, Inc., take a look at insurance coverage issues that could arise in connection with the separation of a principal or partner from a private equity firm. 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 from 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: Private Equity Divorce, Carried Interest, and Insurance Response

Readers of this blog may have noted that from time to time I refer to “the D&O Insurance industry,” or to the “Professional Lines Insurance industry” but may not be sure what I was talking about. The good news is that for anyone who wants or needs to find out about the industry, there is now a book for that. It is called “Professional Lines Insurance: An Oral History,” with the subtitle “The People and Companies Who Built a Niche.” The book is available here. It would be conventional to say that the book was “written by” industry veteran Larry Goanos, but that would suggest that this is a conventional book – which it is not. It is more like a literary form of performance art with the professional lines insurance industry as its subject, and with Larry’s own personal industry experience as the central organizing theme. It is also a detailed account of many of the people who made the industry what it is today.
Continue Reading Book Review: “Professional Lines Insurance: An Oral History”

Policy exclusions with the broad “based upon or arising out of” sometimes may be applied very broadly to sweep beyond the claims that the exclusion aimed to exclude. In a recent coverage dispute, a professional liability insurer sought to apply an exclusion with the broad preamble language and precluding coverage for ERISA and securities law claims in order to preclude coverage even the common law and bankruptcy law claims alleged against the insured. In a February 7, 2020 opinion (here), Eastern District of Michigan Judge Laurie J. Michelson, applying Michigan law, concluded that the exclusion’s preclusive effect did not apply to the common law claims, because the insurer failed to establish the exclusion’s required causal connection between the alleged statutory violations, on the one hand,  and the common law and bankruptcy law claims, on the other hand.  Judge Michelson’s opinion provides an interesting perspective on exclusions with the broad “based upon and arising out of” preamble language.
Continue Reading Broad Form Statutory Claims Exclusion Does Not Preclude Coverage for Common Law Claims

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.
Continue Reading Guest Post: Key 2019 Management and Professional Liability Insurance Coverage Decisions

The D&O Diary’s overseas assignment continued this week with a stop in Mumbai, India’s financial capital. I was in Mumbai to participate in the annual Bima Gyaan Symposium, an educational and networking event for the professional liability insurance industry in India. As reflected in the pictures below, the event was once again well-attended and was a great success.
Continue Reading Mumbai Professional Liability Insurance Symposium

wisconsinAs I have noted in prior posts (most recently here), a recurring D&O insurance coverage issue is the question of whether or not an insured person was acting in an insured capacity at the time he or she allegedly committed the wrongful acts alleged against him or her. These questions arise because individuals often act in numerous capacities, but the D&O policy provides coverage only for those acts undertaken as a director or officer of the insured company.

A recent case involved similar questions arising under a professional liability insurance policy that provided coverage for the insured individual’s acts in his capacity as the trustee of two trusts. The individual sought coverage under the policy for claims brought against him in his capacity as a director or officer of separate companies in which the trusts held controlling ownership interests. In a June 30, 2016 opinion (here), the Wisconsin Supreme Court, applying Wisconsin law,  affirmed the intermediate appellate court’s holding that under the policy’s business enterprise exclusion, which precluded coverage for claims arising from the individual’s actions for entities other than the specified trusts, there was no coverage under the policy and the insurer had not breached its duty to defend.
Continue Reading Trustee’s Professional Liability Insurance: No Coverage for Claims Against Trustee Acting as Director of Separate Corporation

indianaOn April 22, 2015, in a sweeping win for health insurer Anthem Inc., the Indiana Supreme Court held that excess reinsurers on the company’s self-insured E&O insurance program must pay the company’s costs of defending and settling allegations that it had improperly failed to pay, underpaid, or delayed paying medical reimbursement claims. The Court rejected…