Insurers Look to Limit Virus-Related Protections for Executives

Insurance Partner Thomas Bentz was cited in a Bloomberg Law article discussing directors and officers (D&O) liability insurance in the context of COVID-19. D&O policies cover legal costs for corporate leaders if shareholders accuse them of mismanagement or misstatements. Shareholder suits based on large-scale events like the COVID-19 pandemic have become more common in recent years. Lawsuits that hinge solely on a company’s losses from a particular event often don’t fare as well as those that allege specific wrongdoing by a board or executive.

“Can you make a colorable argument that the directors were negligent in their oversight duty or their oversight response?” Mr. Bentz said. “It really has to be tied to something that the directors have done. It can’t just be that the virus hit and that’s all.”

READ: Insurers Look to Limit Virus-Related Protections for Executives