“Related Claims” provisions in directors and officers (D&O) and errors and omissions (E&O) policies, while common, can spawn disagreement as to scope and application. Beyond these substantive questions, an issue arises as to what information a court may consider in determining whether two or more claims are “related” within the meaning of a given policy. The Eleventh Circuit recently analyzed this issue in Health First, Inc. v. Capitol Specialty Insurance ... Keep Reading »
Directors & Officers Liability
Professional Services Exclusion Precludes Coverage for False Claims Act Suit
It is not unusual for a directors and officers liability policy to have an exclusion for professional services. A such, a question often arises regarding whether the claimed wrongful conduct involved the rendering or failure to render professional services in a particular context. In HotChalk, Inc. v. Scottsdale Ins. Co., No. 16-17287 (9th Cir. June 4, 2018), the Ninth Circuit found that coverage was precluded for a False Claims Act suit because the insured’s ... Keep Reading »
Drawing a Line in the Sand: The Second Circuit Tries to Define Where D&O Coverage Ends and E&O Coverage Begins
Policyholders often obtain both errors and omissions (E&O) and directors and officers (D&O) liability insurance policies because they provide complementary coverage. E&O policies provide coverage for claims for wrongful acts arising from the provision of "professional services," and while D&O policies also provide coverage for claims for wrongful acts, they often exclude coverage for such claims arising from the provision of professional services. Despite ... Keep Reading »
When Relying on a Prior Acts Exclusion to Deny Coverage, Be Sure to Connect the Dots
In Certain Underwriters at Lloyd’s of London v. Federal Deposit Ins. Corp., No. 16-16702 (11th Cir. Jan. 23, 2018), the Eleventh Circuit concluded that a “prior acts” exclusion in a D&O policy did not bar coverage where the insurer failed to prove a clear connection to events that occurred before inception of the insurance policy. As this case demonstrates, when an insurer relies on a prior acts exclusion to deny coverage, it not only must establish the wrongful ... Keep Reading »
See Something, Say Something – Especially on Your Application for Insurance Coverage
When is a misrepresentation material on an application for insurance coverage? The Ninth Circuit affirmed a decision from the Central District of California, finding that an answer on an application for D&O insurance was a material misrepresentation, and that therefore the policy was rescinded. The question on the application asked: None of the individuals to be insured under any Coverage Part (the “Insured Persons”) have a basis to believe that any wrongful act, ... Keep Reading »
Ninth Circuit Confirms Privacy Exclusion Bars TCPA Claims
Claims under the Telephone Consumer Protection Act (TCPA) present numerous issues for insurance companies and policyholders. Because TCPA claims lend themselves to class action suits, the potential exposure can be significant. For years, liability insurers have argued that invasion of privacy exclusions bar coverage for claims under the TCPA. These arguments received a boost when the Ninth Circuit held that “a liability insurance policy that unequivocally and broadly ... Keep Reading »
SDNY Rules SEC Investigation Is A “Claim” Within Pending and Prior Acts Exclusion
The U.S. District Court for the Southern District of New York has held that a long-running investigation by the SEC constituted a “Claim” triggering the pending and prior claims exclusion in an excess directors and officers (“D&O”) policy. See Patriarch Partners, LLC v. AXIS Ins. Co., No. 16-cv-2277 (VEC) (S.D.N.Y. Sept. 22, 2017). This case stems from a high-profile SEC investigation into plaintiff Patriarch Partners, LLC (“Patriarch”) relating to certain ... Keep Reading »
“Arising” tide for insurers: 11th Circuit takes expansive view of Prior Acts Exclusion
Claims-made policies often cover acts that occur before a policy period, so long as they result in a covered claim during the policy period. This is a fundamental difference between claims-made and occurrence policies. But the retroactive scope of a claims-made policy is not limitless. Many claims-made policies contain 'retroactive dates' that cut off an insurer's liability for occurrences before that date. Financial lines claims - as opposed to bodily injury or ... Keep Reading »
Fifth Circuit Reverses Mississippi District Court’s Interpretation of “Ambiguous” Language to Nullify Defense Within Limits Coverage
Insurance policies that include the cost of defending a particular claim or action within the policy’s limit of liability, often referred to as “burning,” “eroding,” or “defense within” limits policies, are common in the management liability insurance market. As we previously reported, a 2015 United States District Court for the Southern District of Mississippi decision cast a cloud of doubt over liability insurers issuing defense within limits policies in Mississippi ... Keep Reading »
Who is an Insured and What is a Claim? Circuit Courts Offer Guidance in Applying the “Insured vs. Insured” Exclusion in D&O Policies
Typical directors and officers (“D&O”) liability policies exclude from coverage claims brought by one of the company’s directors or officers against another, or between the company and any of its directors or officers. The purpose of the exclusion is to make clear that there is no coverage for intra-company in-fighting. It also provides insurers with some protection against potentially collusive claims. Sometimes questions arise as to who the “company” is, or whether ... Keep Reading »