Broker Evan Bundschuh writes about common exclusions which can undermine the coverage offered by D&O insurance policies, in the context of FCPA enforcement.
Regulatory exclusions included in some D&O policies – especially in high-risk industries – serves as the single most problematic exclusion. Not only can it deny coverage for costs related to regulatory activity, but potentially also in the event of a resulting bankruptcy or follow-on securities claim.
Conduct exclusions can come into play because FCPA claims often involve assertions of intentional wrongdoing. Certain language can provide some protection, limiting the classes of misconduct that’s excluded, when the determination is made, and severability for “innocent actors”.
Insured vs insured exclusions can sometimes be replaced with “entity vs insured” exclusions, which only preclude claims brought by an insured entity, against an insured person.
