Director’s and Officers Liability Coverage Part Five

You should also be aware that your insurer may not cover you for securities fraud.

A very common reason to buy D&O insurance is for protection against securities-law violations. Policies provide specific coverage for these claims while at the same time exclude claims related to fraud.

One way to soften this situation is to have clause in the policy that specifies that the fraud exclusion will not take effect until there has been final adjudication by a court of law confirming that in fact a fraud did occur. This at least insures coverage if you settle out of court.