Officers to face backdating directors insurers claims

This broad wording means that a lawsuit is, as the memo’s authors put it, “only one mechanism by which coverage may be triggered.” For example, under some policies’ wording, a governmental subpoena or a civil investigative demand may constitute a claim.

As the memo authors note, “the potential expense associated with responding to government subpoenas and investigative demands should not be underestimated.” Whether a D&O insurance policy provides protection to respond to subpoenas or governmental investigations is very much dependent on the precise wording of the policy.

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These policies are usually structured with a single declarations page specifying the policy period and the limits of liability, a single policy form specifying terms and conditions common to all coverage, and then separate policy forms for each of the coverage lines in the combined program.Yet another private company D&O insurance policy exclusion that can be critically important is the public offering exclusion.Private company D&O insurers do not intend to cover exposures arising from the issuance or subsequent public trading of company securities, so private company D&O insurance policies typically include a public offering exclusion.Other common entity exclusions that may be found on private company D&O insurance policies include antitrust and deceptive trade practices exclusion; professional services exclusion; and contractual liability exclusion.These exclusions potentially could be very significant in the event of a claim and could significantly affect the availability of coverage in many kinds of claim.

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