May 24, 2016

Five Things You Need To Know About D&O Insurance: 1) Coverage Is Incredibly Broad

Today we introduce a new “Five Things You Need To Know” insurance recovery law video series.  We start with the topic of D&O insurance.  D&O insurance has, perhaps, been given more attention than any other kind of corporate insurance. The reasons for this are self-evident.  D&O insurance is one of the most important protections afforded to corporate policyholders, and it also serves as the last line of defense against greedy plaintiffs’ lawyers seeking to tap into the personal assets of individual directors and officers.

Even people that might not care about any other kind of insurance, typically care about D&O insurance.  Despite all of the attention paid to D&O insurance,  there remain some misconceptions about coverage, and insurer-created coverage landmines can prevent recovery in the event of a claim.  Given the importance of D&O insurance, we thought that it would be helpful to cut through some of the noise and identify, as a starting point for discussion, five things to know about D&O insurance that are incredibly important. 

The first of the five things you need to know about D&O Insurance is the incredible breadth and scope of coverage afforded.  D&O policies, particularly private company D&O insurance policies, afford extraordinarily broad coverage. Securities claims may be what most people think of when it comes to D&O insurance coverage, but the policies cover much more than just securities claims. 

In addition to securities claims, D&O insurance policies also cover consumer claims, a wide variety of business torts, certain contract disputes, criminal activities, and governmental investigations.  Although the governmental investigation side has received great attention, the host of other kinds of claims covered under D&O policies can go unnoticed.  See Governmental Investigation Success Insurance Story,  Governmental Investigation Insurance Issues for Non-Insurance Lawyers, Insurance Coverage for Governmental Investigations.

If you are thinking about D&O Insurance, your first thought should be that D&O coverage is incredibly broad.  D&O insurance is the first place to look when a potential insurance claim arises. If you have any questions about D&O Insurance, or whether any given kind of claim is covered under a specific D&O insurance program, please don’t hesitate to contact us for more information. We hope that you check back with us for the rest of this series.

We have included the transcript of the video below:

Five Things You Need To Know About D&O Insurance:  1) Coverage Is Incredibly Broad

I would like to introduce the series we’re going to do, five things you need to know series. We’re going to start that with five things you need to know about D&O insurance. And again, we’re dealing in a cooperate perspective. We’re talking about cooperate policy holders and this is if you’re a cooperation and you have D&O insurance claim, what are the kind of things you need to think about? And we have grouped the five most important things into one short video.

Number one, D&O insurance policies are extremely broad, so let’s start from that perspective. D&O insurance policies cover consumer claims, they cover class actions, they cover securities claims, they cover business torts, they cover criminal activities. As a general rule those are the types of things that D&O insurance policies cover, but it doesn’t stop there.

They cover government investigations, SEC investigations, DOJ investigations. There is a whole alphabet soup of governmental agencies that investigate companies. Those are the type of claims that D&O policies cover. Now, there are several types of D&O policies, there is private company and there are differences between the two.

But as a general rule, cooperations should go in thinking about D&O insurance as that insurance is about the broadest insurance that I can buy. And whenever a claim comes up I should be thinking about D&O insurance, don’t limit yourself to securities claims, don’t limit yourself to the traditional claims against directors and/or officers of the company. This policies are extremely broad.

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