What claims against a corporation are covered by a typical D&O policy?
Until a few years ago, a typical D&O policy did not cover corporate liability, and instead merely reimbursed the expense incurred by the corporation to indemnify officers and directors. In order to address allocation issues, D&O insurers now offer entity coverage for securities claims. In other words, upon request the insurer will cover the liability of the corporation itself for securities law claims. Securities law claims usually are brought by or on behalf of shareholders of the corporation. A class action filed in federal court claiming that a corporation or its officers made false or misleading statements that inflated the market price of the corporation’s securities is a typical securities law claim. Although most policies limit the scope of entity coverage to securities law claims, some broader coverage may be available for an additional fee.
