MEMBERS ONLY CLE: Six Questions Senior Management & Board Members Ask Corporate Counsel About D&O Insurance

Shareholder class and derivative litigation is scary for senior officers and directors whose expertise and focus lie in making the business profitable, not on defending against securities lawsuits.  They understandably assume that because they’ve always paid the premiums for their Directors’ and Officers’ (D&O) Liability Insurance, these claims will be covered and they won’t have to take precious time away from running the business to deal with them. 

Yet there comes a time in every securities lawsuit when directors and officers have to make decisions.  When that time comes, they ask questions about their D&O coverage that corporate counsel must be prepared to answer.  This program will address the top six questions we hear from directors and officers in our corporate policyholder insurance recovery practice:

1) What does our D&O policy cover and exclude, and what’s the risk that the insurance company can get out of paying this claim?

2) We’ve been sued for securities fraud, yet we’ve heard that fraud and intentional conduct aren’t covered by insurance.  Can the insurance company get out of paying the pending claim?

3) What if we want to settle the pending case and not risk a trial, but the insurance company wants to roll the dice and refuses to settle?  What are our options?

4) What happens if, unknown to us, someone made a mistake or even lied in the application for our D&O policy?  Will we still be covered?

5) What happens when the SEC calls and asks for our cooperation in an informal investigation, and we have to hire counsel to produce documents and prepare witnesses to protect the company?  Do we have coverage for the cost of this?

6) Are there any gaps in coverage that we should tell our broker to plug at the next policy renewal?

When corporate counsel has ready answers to such questions, the Board and senior management gain confidence that they have a trusted advisor knowledgeable about D&O insurance to turn to in a crisis.  The goal of this presentation is to help corporate counsel become that person.

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