New York Court Affirms D&O Coverage for Derivative Claims and Requires Advancement of Defense Costs
Should a directors and officers (D&O) insurance policy cover derivative claims? And should a D&O insurance policy advance defense costs? A recent decision from New York’s Appellate Division, First Department, reaffirmed that the answer is “yes” to both questions, and rejected an insurance company’s arguments to the contrary. In Trustees of Princeton University v. National Union Fire Insurance Co. of Pittsburgh, Pa., 15 Misc. 3d 1118A (Table), 839 N.Y.S.2d 437 (Table), 2007 N.Y. Misc. LEXIS 2350, (Sup. Ct. Apr. 10, 2007), aff’d, 52 A.D.3d 247, 859 N.Y.S.2d 174 (1st Dep’t 2008) (“Trustees of Princeton”), an insurance coverage dispute, AIG, through its insurer National Union, tried to escape from providing D&O insurance coverage for direct and derivative claims under its D&O policy and had refused to advance defense costs.
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