April 5, 2016

#6 Insurance Issue for Non-Insurance Lawyers: D&O Insurance Policy Terms and Conditions

Sophisticated organizations have long recognized that the legal review of Directors & Officers liability policies, if done correctly, can result in vastly superior coverage.  Of all types of corporate insurance, D&O insurance is unique in that it protects both corporate and personal assets.  From the corporate entity standpoint, it affords some of the broadest coverage available.  Yet, it also affords the last backstop against the loss of personal assets of company directors and officers.  With D&O insurance, the stakes are high.  It is critically important to negotiate D&O policy language that not only addresses and resolves thorny legal issues raised in recent legal decisions, but that also covers industry and company specific risks.

In our continuing series of Top Ten List of Insurance Issues for Non-Insurance Lawyers, Brian Friel of Miller Friel discusses in today’s video the importance this key asset plays in every public and private company’s risk management program.

Brian first distinguishes how legal review of D&O insurance policies is different from the services afforded by insurance brokers.  A good insurance broker is instrumental in the process.  Brokers know what language insurers have offered in the past and can provide critical peer company data to determine appropriate limits, deductibles and premiums.   Brokers cannot, however, determine how that language will hold up in light of recent legal decisions.

To illustrate the role an insurance coverage lawyer can play in the underwriting process, Brian specifically discusses the personal misconduct and fraud exclusions in D&O insurance policies.  We have written extensively about this issue in the past, but still see too many policies with less than ideal language.  See  7 Tips for Fighting Back Against the Personal Profit Exclusion  Too often these exclusions are broadly worded.  This undesirable language affords the insurers with an argument to deny coverage, and some insurers have taken the position that virtually any complaint that alleges personal misconduct, self-dealing, or criminal activities is excluded from coverage.  It is crucial that these exclusions are limited and narrow in scope.

The ultimate take-away from today’s discussion is that claim uncertainty and protracted coverage litigation can often be averted by companies that take a more proactive and aggressive approach in the underwriting process.  As we have seen over and over again, better coverage results from demanding the broadest, most favorable policy terms and conditions available in the insurance marketplace.

Please watch the video to learn more, and if you have any concerns or questions about your current coverage or upcoming policy renewal, please give us a call in our Washington, DC office at 202-760-3160.

To see the whole series, check out Top Ten Insurance Recovery Issues For Non-Insurance Lawyers.


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