It’s all part and parcel of being a risk manager. At five o’clock on a Friday, all of a sudden, a fax rolls in or an e-mail pops up on the computer screen: Somebody, somewhere, has initiated litigation against your company. In a flash, dinner reservations are rescheduled and plans pushed back so that you can review the correspondence and put your insurance company on notice of the claim. And then … you wait, secure in the knowledge that your insurance company will step in to provide a defense and, if necessary, indemnification.
All too often, however, risk managers are shocked to learn that they don’t have the coverage they think they do, particularly when the policy in question is “claims-made” — providing coverage for acts that both occur and are reported to the insurance company during the time the policy is in force.
Indeed, claims-made policies, such as directors and officers (D&O) and errors and omissions (E&O) liability policies, are rife with exclusions, provisions, and conditions that can make it nearly impossible to determine which insurance policy provides coverage for a given claim and which may even provide the insurance company with an argument that there is no coverage for a given claim at all — premium payments and signed insurance policies notwithstanding.
As such, policyholders must be sure to carefully analyze their insurance policies and all available coverage to ensure that they maximize recovery.