Filing claims for insurance coverage under directors' and officers' ("D&O") and corporate fiduciary liability policies is a process fraught with pitfalls for the policyholder. It may not surprise many officers and directors to learn that over 40 percent of all outside directors of Fortune 1000 companies have been sued in connection with their board service. It may, however, come as a surprise to many that - too often - liability insurance companies become an adversary in addition to the underlying claimant.
Exclusion-laden D&O and fiduciary liability policies lead to often unexpected and, at times, unwarranted denials of insurance coverage. Considering the huge potential for liability facing corporate directors and officers, shortfalls in liability insurance protection present an unacceptable risk to policyholders.
Following is a discussion of some frequent and not so frequent sticking-points which may reduce or eliminate D&O and fiduciary liability insurance coverage. Familiarity with both the insurance claims process and recurring insurance coverage confrontations can place policyholders in a stronger position as they attempt to secure coverage under their insurance policies.