Protecting D&O Claims from Rejection

American Banker

PUBLISHED ON: April 20, 2009

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After devastating losses in the economic meltdown, many financial institutions face a second, potentially catastrophic disaster: suits by shareholders and investors.

The last line of defense against crippling liability from those suits is a company's directors and officers insurance, along with professional, fiduciary or management liability (collectively "management") insurance.

Unfortunately, if a claim is not barred from coverage under a policy exclusion, insurers may try to manufacture grounds for a coverage denial because of the policyholder's conduct after the claim has been submitted.

Policyholders must be very careful not to let their eagerness to resolve suits that threaten their survival create grounds for the denial of coverage.