Directors and officers (D&O) and errors and omissions (E&O) policies often contain “capacity” limitations, which restrict coverage to claims against the insured alleging acts undertaken by the insured in his or her insured capacity. These insured capacity limitations can take on different forms. For example, the policy may limit the definition of an “insured person” to someone acting in his or her capacity as an officer or director of the insured company. Or the ... Keep Reading »
Eleventh Circuit Holds Buzz Words in Arbitration Demand Insufficient to Trigger Duty to Defend
On November 8, 2022, the Eleventh Circuit Court of Appeals agreed with the U.S. District Court for the Middle District of Florida that Mount Vernon Fire Insurance Co. did not have a duty to defend Global Travel International Inc. in an arbitration between Global Travel and Qualpay Inc. despite Global Travel’s best efforts to bring the claim within coverage. Global Travel and Qualpay entered into a merchant card processing agreement pursuant to which Global Travel ... Keep Reading »
Consent to Settle: Third Circuit Reminds Insureds to Obtain Prior Written Consent Required by a Claims-Made Policy or Face Claim Denial, and Rejects Bad Faith Claim in Absence of a Finding of Coverage Under New Jersey Law
In a non-precedential decision, the Third Circuit Court of Appeals upheld a district court’s grant of summary judgment to an errors and omissions insurer that declined to indemnify a settlement because the insured had settled the underlying lawsuit without obtaining the insurer’s prior written consent, “an express condition of coverage under the policy’s consent clause.” Interestingly, the court noted that the E&O insurer had paid the insured’s “defense costs to the ... Keep Reading »
Years of Embezzlement Precluded From Coverage Under E&O Policy’s Commingling Exclusion
A federal district court in North Dakota recently granted an insurer’s motion to dismiss in Campbell Property Management LLC v. Lloyd’s Syndicate 3624, finding that both prongs of a “commingling exclusion” to coverage applied. The court granted the insurer’s motion to dismiss the breach of contract and bad faith claims asserted by Campbell Property Management, finding that there was no coverage for the subject acts, and thus there could be no bad faith. Lloyd’s issued ... Keep Reading »
Seventh Circuit Finds “Based Upon or Arising Out of” Language in Contract Exclusion Renders Coverage “Illusory”
In Crum & Forster Specialty Insurance Co. v. DVO, Inc., No. 18-2571 (7th Cir. Sept. 23, 2019), the Seventh Circuit reversed a decision of the U.S. District Court for the Eastern District of Wisconsin, finding that the contractual liability exclusion in an E&O policy containing “based upon or arising out of” language rendered coverage under the policy “illusory” and therefore must be reformed to match the policyholder’s “reasonable expectations.” The appeal ... Keep Reading »
Six Degrees of Separation: Eleventh Circuit Upholds a Broad ‘Related Claims’ Provision
“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 »
Defining ‘Logical Connection’: NC Federal Court Tackles ‘Related Claims’
Insurance carriers and policyholders often argue about the scope of policy provisions. Generally, policyholders take an expansive view of insuring agreements, while carriers often construe them more narrowly. But not all coverage arguments follow these familiar lines. Take, for instance, the “related claims” debate. Most third-party liability policies contain aggregation language. Such policies deem “related claims” to be a single claim “first made” when the first ... 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 »
As TCPA Class Actions Soar, Issues Emerge in TCPA Coverage for Claims
Both the number of cases under the Telephone Consumer Protection Act (TCPA) and the types of practices that those cases challenge have mushroomed within the last several years. Yet a dedicated form of insurance against TCPA claims has not yet developed. Instead, businesses seeking defense and indemnification of TCPA suits have resorted to traditional policy provisions dealing with property damage, personal and advertising injury, and (more recently) the language of ... Keep Reading »