Directors' and Officers' Insurance Coverage

Clients tell us that our experience representing public and private companies, directors, officers, boards of directors, and board committees allows them to feel comfortable that they will be protected against a wide variety of risks.

Perkins Coie’s Insurance Coverage lawyers have unmatched experience in assisting clients in the review and analysis of directors’ and officers’ (D&O) liability insurance policies and Employee Retirement Income Security Act (ERISA) fiduciary liability insurance policies, and in the purchase of these policies.

We know the D&O insurance market, its trends, and what aspects of policies are negotiable. Additionally, with our knowledge of the dynamics of securities litigation and derivative litigation, we are uniquely experienced to assess the associated risks, and the important role D&O insurance plays in the settlement of those lawsuits. 

We know how and when to negotiate disputes that arise under these policies, and how and when to litigate those disputes. Our lawyers have been involved and have been lead counsel in some of the largest and most significant insurance coverage litigation of the past two decades. We have experience dealing with every major insurer in the domestic, London, and Bermuda insurance markets, including industry captives. Our experience gives our clients comfort and credibility when interacting with their insurers.

How We Can Help

Assessment

Each counseling engagement starts with an in-person or substantial telephone conversation during which we assess our clients’ needs in purchasing D&O insurance. We address several critical issues: Is the coverage meant primarily as a protection for the directors and officers or as a protection for the corporation’s balance sheet against securities claims as well? Are there specific corporate transactions on the horizon that may impact the type of coverage needed? What is the company’s relationship with its insurers? We want to fully understand the company’s bargaining leverage.

Existing D&O Coverage Review

After the initial needs assessment, we will review the company’s existing D&O coverage utilizing the following framework:

• Will the coverage protect the company and its directors and officers against government regulator investigations and enforcement actions, private securities fraud lawsuits, and tagalong ERISA lawsuits?
• How are the directors and officers protected if the company becomes insolvent? Will the directors and officers have to pay out of their pockets before the insurance starts working? Will the D&O policies become assets of a bankruptcy estate? Will the D&O policies protect the directors and officers against claims by a bankruptcy trustee?
• Do the policies allow an insurer to void coverage for all directors and officers based on the misrepresentations of just one or two?
• Is the fraud exclusion in the D&O policies sufficiently narrow to protect the company and its directors and officers against securities fraud lawsuits—the main reason for purchasing the policies?

Purchasing Assistance

We advise clients as they work with their insurance brokers to negotiate the purchase of insurance, prioritizing the changes they would like and assisting them in deciding whether and when to compromise on a particular issue. We recognize insurers’ negotiating tactics and work to ensure that our clients get coverage enhancements that are consistent with the most favorable in their particular industry.

Proposed Coverage Review

After the terms are negotiated, we review the proposed coverage to assure that it conforms to the client’s intentions.

Coverage Reporting

Once the coverage is purchased, we prepare a detailed report for the board of directors on the strengths and weaknesses of the purchased coverage. We explain to the board how the coverage protects it from the major risks of liability and give the board a sense of how its coverage compares to the coverage of other companies and how the coverage interacts with other protections, such as the corporation’s bylaws and contractual indemnification provisions.

Representative Experience

Purchasing and Managing the Best D&O Coverage

With our clients’ objectives, needs, pricing constraints, and risk considerations in mind, we assist in negotiating and purchasing the best D&O coverage available in the market. For boards or board committees that hire us, we provide counsel regarding potential conflicts of interest that may exist in the purchase of D&O insurance, and offer creative solutions for resolving those conflicts. 

Managing Litigation and Regulatory Investigations and Enforcement Actions

Our clients have hired us to oversee the insurance aspects of securities fraud, ERISA, derivative litigation and all manner of investigations and enforcement actions by state and federal regulators. Plaintiffs and plaintiffs’ attorneys sue companies and their directors and officers with the primary goal of securing a large settlement out of the company’s D&O policy. The D&O policy thus becomes an important piece of securities fraud, fiduciary liability, ERISA, and derivative litigation cases. We seek to ensure that all appropriate steps are taken to make sure the D&O insurers, rather than the company and its directors and officers, will pay for the defense of the litigation and any potential settlement or judgment in the litigation. We work with the company to properly notify the insurers of the litigation and to adequately cooperate with the insurers to ensure that no reason is created for the insurer to deny coverage. With our knowledge of the dynamics of securities fraud litigation, we have assisted clients in using insurance proceeds to settle a number of these kind of cases.

In connection with regulatory investigations and enforcement actions, we help clients navigate complex notice considerations and work to ensure that once notice is given, the company’s defense expenses are paid to the maximum extent under the policy.

Resolving Disputes 

With years of relevant experience, we assist our clients in seeking to resolve any disputes with their D&O insurers and in obtaining payment under the policies. If necessary, we also represent our clients in any litigation. We have extensive experience representing companies in disputes under D&O and fiduciary liability policies, including the defense of lawsuits brought by insurers seeking to rescind the D&O coverage of companies, officers, and even outside directors.

Serving As Expert Witness

We have been hired as expert witnesses on D&O insurance, have authored books and published dozens of influential articles on D&O insurance, and are nationally recognized by organizations such as Chambers as some of the top policyholder lawyers in the country.