Category Archives: D&O Insurance

Directors and officers insurance coverage for Stanford Financial Group losses.

The Bureau of National Affairs recently wrote an article about a new court decision discussing directors and officers insurance coverage for officers of Stanford Financial Group.   In the BNA Corporate Accountability Report, reporters Tom Edmondson and Tina Chi discussed the decision Pendergest-Holt v.
Certain Underwriters at Lloyd’s of London
, No. 10-20069 (5th Cir. Mar. 15, 2010).  (BNA has made the full text of the decision available here.)  In the lede, Mr. Edmondson and Ms. Chi explained:

The Fifth Circuit’s recent ruling in Pendergest-Holt v. Certain Underwriters at Lloyd’s of London underscores the importance of the wording of the prerequisite provisions in the conduct exclusions in directors and officers insurance policies, corporate insurance attorneys told BNA in recent interviews.

The decision discussed the advancement of defense costs under a directors and officers insurance policy that the London insurance market (referred to as Lloyd’s of London in the story).  The story discussed how the court interpreted policy exclusions and limitations, and that the court rejected the insurance company’s interpretation of how the money laundering exclusion applied.

The article also quotes me at the end, providing some pointers and best practices that I gave for policyholders in D&O and other insurance claim disputes.  For example, the article states:

Insureds should also keep in mind that when they want to make a claim under an insurance policy, any
“high-dollar” potential loss, claim, or actual claim will likely cause the insurance company to seek opinions
from sophisticated coverage counsel that represent insurance companies, Godes said. “These insurance
attorneys will advise in terms of what provisions and exclusions may apply,” he said.
Thus, “insureds and policyholders are well advised to take the same approach as these insurance
companies and have counsel involved early so that they can better protect their own rights,” Godes said.

For the rest of my advice, you’ll have to check out the full article.  My firm is hosting a copy of the article online, which can be found here.

Disclaimer:

This blog is for informational purposes only. This may be considered attorney advertising in some states. The opinions on this blog do not necessarily reflect those of the author’s law firm and/or the author’s past and/or present clients. By reading it, no attorney-client relationship is formed. If you want legal advice, please retain an attorney licensed in your jurisdiction. The opinions expressed here belong only the individual contributor(s). © All rights reserved. 2010.

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Check out my article, “At Risk: Insurance Coverage for Cyber Security and Data Breaches” in Strategize Magazine.

The fine folks at Strategize Magazine have published an article that I wrote, along with my colleague, Ken Trotter.  The article is titled, “At Risk:  Insurance Coverage for Cyber Security and Data Breaches.”  It’s in the January/February 2010 edition of the magazine.

Strategize is a magazine that promises:

in each issue of Strategize, we’ll clear out the clutter to reveal what’s really relevant. Our aim is to be your one-stop information source that brings the reader to the boardroom, following the national trends that affect business today, and the innovations of our most provocative business leaders.

Our article gives a clear and easy to read overview of insurance coverage for cyber security and data breach claims.  We give real world examples of data breaches and cyber security incidents, and how they affect businesses today.  We also discuss coverage for those types of claims under commercial general liability insurance policies, first party insurance policies, crime policies, directors and officers policies, and more.  Interested?*  Then aim your mouse here to readAt Risk:  Insurance Coverage for Cyber Security and Data Breaches.”

* Even if you’re not that interested in the topic, it’s worth the click to see the cool online magazine format and graphic that they put with the article.

Disclaimer:

This blog is for informational purposes only. This may be considered attorney advertising in some states. The opinions on this blog do not necessarily reflect those of the author’s law firm and/or the author’s past and/or present clients. By reading it, no attorney-client relationship is formed. If you want legal advice, please retain an attorney licensed in your jurisdiction. The opinions expressed here belong only the individual contributor(s). © All rights reserved. 2010.

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“Data Breaches Are Not Going Away Will Your Company Be Covered for Those Risks?”

In the December 2009 edition of e-Commerce Law & Strategy, you’ll find my new article:

Data Breaches Are Not Going Away

Will Your Company Be Covered for Those Risks?

By Scott Godes

Because the costs of data breaches can be so astronomically high, the importance of ensuring that e-commerce and other types of firms have insurance to cover such claims cannot be overstated.

I don’t want to give away the entire article…but, as you might imagine, I discuss the availability of insurance coverage for data breaches within the piece.  The article analyzes coverage under Commercial General Liability, Business Owners Policies, and other sources of insurance coverage for data breaches.  Click on over for the full version of the article.

Update: A reprint of the full article now is available here.

Disclaimer:

This blog is for informational purposes only. This may be considered attorney advertising in some states. The opinions on this blog do not necessarily reflect those of the author’s law firm and/or the author’s past and/or present clients. By reading it, no attorney-client relationship is formed. If you want legal advice, please retain an attorney licensed in your jurisdiction. The opinions expressed here belong only the individual contributor(s). © All rights reserved. 2009.
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Presentation on Your Cyber Security Strategy — How to Capitalize on New Opportunities & Mitigate Risks

Interested in cyber security issues?  Please join me for the following program (now archived here), live or via webinar, presented by the Washington Metropolitan Area Corporate Counsel Association:

WMACCA Government Contractors Forum: Your Cyber Security Strategy — How to Capitalize on New Opportunities & Mitigate Risks

Dec 9, 2009
8:00 AM – 10:00 AM
LIVE at Gannett Co., Inc., 7950 Jones Branch Drive, McLean, Virginia OR by WEBCAST from your desk.

Overview

As the corporate world becomes more and more virtual, the need for cyber and data security has never been greater. Understanding the Administration’s new cyber security initiatives and changes on the legislative front can give companies a competitive advantage in developing comprehensive cyber security programs. If your business is grappling with emerging threats, limited funds, and slow procurement processes, you are not alone.  Find out how to capitalize on the opportunities available through the Safety Act and other mechanisms to protect your company, and how your insurance coverage policies may cover potential liabilities. This program will address what you need to know, what you need to do, and how to “just do it.”

Speakers

Presented by Scott N. Godes, [formerly] of Dickstein Shapiro LLP; David Kessler, Senior Corporate Counsel, Symantec Corporation; Kenneth A. Mendelson, Managing Director, Stroz Friedberg. Moderated by Brian E. Finch of Dickstein Shapiro LLP.

Notes

Breakfast will be provided on-site from 8:00 – 8:30 a.m.  The program and webcast will begin at 8:30 a.m.

Webcast Log-In Instructions:
1. Go to http://www.ec.commpartners.com
2. In the middle of the page where it says Meeting Number, type the following number –340258
3. Click Enter
4. Type your full name and e-mail address when prompted

CLE

Credits: 1.5 hour pending
State: Virginia
Category: General

Contact

Robin Hayutin
Phone: 703-242-8773
E-mail: robin.hayutin@wmacca.com

Location

LIVE at Gannett Co., Inc., 7950 Jones Branch Drive, McLean, Virginia OR by WEBCAST from your desk.

703-854-6000

Sign Up

Cost

Free of charge

View All Events

Disclaimer:

This blog is for informational purposes only. This may be considered attorney advertising in some states. The opinions on this blog do not necessarily reflect those of the author’s law firm and/or the author’s past and/or present clients. By reading it, no attorney-client relationship is formed. If you want legal advice, please retain an attorney licensed in your jurisdiction. The opinions expressed here belong only the individual contributor(s). © All rights reserved. 2009.
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Steve Goldberg: “Insurers Too Often Want to Weasel Out of the D&O Insurance They Sold.”

WeaselShould this be the new corporate mascot for insurance companies?  The weasel?  Maybe so, based on the title of my colleague, Steve Goldberg’s post:  “Insurers Too Often Want to Weasel Out of the D&O Insurance They Sold.”

Steve explains over at the Catastrophic Insurance Coverage blog that “Fortunately, [insurance companies] don’t always succeed, as evidenced by the recent decision discussed below.”

In his post, Steve gives a nice analysis about some of the arguments that insurance companies make when trying to deny coverage for D&O claims.  Steve starts out by explaining:

One of the many ways that some insurance companies try to avoid honoring their obligations under D&O insurance policies is to claim that one of the many insureds included within the coverage of the policy took some action that assisted the plaintiffs in the lawsuit against the company and its directors and officers. In doing so, they rely upon the insured vs. insured exclusion. That exclusion is frequently called by way of shorthand the IVI exclusion.

The line from Steve’s post that struck me as most important for corporate policyholders, directors, and officers to keep in mind is:

The moral of these two cases is simple: when the stakes are high, as they most always are in these types of D&O coverage disputes, an insured needs to be ever vigilant and perhaps aggressive when dealing with its carriers as the carriers will often themselves be quite aggressive in seeking to deny coverage.

Steve goes on to discuss recent authority in which courts refused to let insurance companies weasel out of their D&O policy obligations.  It’s worth clicking over to Steve’s blog, the Catastrophic Insurance Blog, and giving the piece a read.

rssAnd if you haven’t already added Steve’s feed to your newsreader, here’s the link to do so.  I added the feed to my Google Reader subscription list as soon as I saw the blog go live.  You can also add the feed for the Corporate Insurance Blog to your newsreader by clicking here.

Disclaimer:

This blog is for informational purposes only. This may be considered attorney advertising in some states. The opinions on this blog do not necessarily reflect those of the author’s law firm and/or the author’s past and/or present clients. By reading it, no attorney-client relationship is formed. If you want legal advice, please retain an attorney licensed in your jurisdiction. The opinions expressed here belong only the individual contributor(s). © All rights reserved. 2009.
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Lexis’ Insurance Law Blog Features My Post Regarding Independent Director Liability Insurance Policies

This month, the featured topic over at the Lexis Insurance Law Center is “Current Topics are Misrepresentation and D&O/Professional Liability/Financial Crisis.”  Karen Yotis, who does a terrific job running the ILC, has been kind enough to feature one of my pieces, Extra Insurance Coverage for Outside Directors in Times of Financial Uncertainty: An Overview of Independent Director Liability Policies, which you can find by clicking here.

In the introduction of the piece, I give an overview of Individual Director Liability insurance policies, and explain that:

In these times of financial uncertainty, outside directors on corporate boards of directors may request that the companies’ boards companies purchase Individual Director Liability (IDL) insurance for them. Generally speaking, IDL insurance is just for outside or independent directors of a company and, depending on the form in which it is written, may offer independent directors additional insurance protection if the corporate policyholder’s insurers were to attempt to deny or rescind coverage under the policyholder’s directors and officers insurance policy.
I also note that:
There is a dearth of case law on this issue, but commentary on Delaware corporate law, for example, suggests that it would be appropriate for a corporation to buy IDL policies for its outside directors; the intent of the drafters of Section 145(g) of the Delaware Corporation Law appears to recognize that Delaware corporations may purchase insurance for their executives’ benefits, allowing “corporation[s] to do directly what [they] had been doing indirectly for years: reimbursing directors for premiums they paid personally to maintain such insurance.” E. Norman Veasey, Jesse A. Finkelstein & C. Stephen Bigler, Delaware Supports Directors with a Three-Legged Stool of Limited Liability, Indemnification, and Insurance, 42 Bus. Law. 399, 419 (1987). Thus, if a policyholder chose to purchase IDL policies for its independent directors, a policyholder could argue that it was replicating what independent directors could have done previously under Delaware law (i.e., purchase their own individual policies).
I advise independent directors and officers and corporate policyholders that:
A policyholder should consider whether the proposed policy forms, whether individual or group, provide natural person-specific or position-specific coverage. IDL insurance may be flexible on this issue, possibly tailored to the insured’s requests to provide coverage for all independent directors, board committee members, or even individual board members. For example, National Union (an AIG insurance company) stated in a 2004 article that when writing its “IDL Premier” policy, which usually “insure[d] all non-executive directors,” “the definition of ‘insured’ can be amended to include only a limited number of individuals (such as the audit committee) or even only one individual (such as the financial expert).” D&O Insurance in 2003/2004, Briefing Paper, 1449 PLI/Corp 439, 456 (2004).

For additional analysis and advice, click on over to the original post at the Insurance Law Center.

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Disclaimer:

This blog is for informational purposes only. This may be considered attorney advertising in some states. The opinions on this blog do not necessarily reflect those of the author’s law firm and/or the author’s past and/or present clients. By reading it, no attorney-client relationship is formed. If you want legal advice, please retain an attorney licensed in your jurisdiction. The opinions expressed here belong only the individual contributor(s). © All rights reserved. 2009.

Should Outside Directors Request the Purchase of Independent Director Liability Policies?

Scott N. Godes [formerly] is counsel in Dickstein Shapiro’s Insurance Coverage Practice.

Should outside directors on corporate boards of directors request that the companies’ boards companies purchase Individual Director Liability (IDL) insurance for them?  Generally speaking, IDL insurance is just for outside or independent directors of a company and, depending on the form in which it is written, may offer independent directors additional insurance protection if the corporate policyholder’s insurers were to attempt to deny or rescind coverage under the policyholder’s directors and officers insurance policy.

Read the rest of the post here, at Securities Docket.

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Disclaimer:

This blog is for informational purposes only. This may be considered attorney advertising in some states. The opinions on this blog do not necessarily reflect those of the author’s law firm and/or the author’s past and/or present clients. By reading it, no attorney-client relationship is formed. If you want legal advice, please retain an attorney licensed in your jurisdiction. The opinions expressed here belong only the individual contributor(s). © All rights reserved. 2009.

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