Mind Your Ds And Os: Policy Language Proves Determinative In Director And Officer Insurance Coverage

A recent pair of opinions from New York and Pennsylvania shows the importance of evaluating all parts of director and officer (D&O) insurance coverage, down to each definition.  These cases, one holding for the insured and one for the insurer, demonstrate that a policy's terms can be absolutely critical if the insured seeks indemnification for defense costs. 

In American Casualty Company of Reading, PA v. Gelb, a lower court in New York ordered an insurer to cover the defense costs of an adversary proceeding against the insured's directors and officers related to the insured's bankruptcy.  Even though the allegedly wrongful acts by the insured's directors and officers purportedly caused the bankruptcy, the court found the insurer responsible for the defense costs claim because it arose after the insured's coverage began.