Settling A Securities Suit: 'Loss' Under D&O Policy?

Law360, New York (January 27, 2009, 12:00 AM EST) -- The insuring agreement in the typical directors and officers liability policy (“D&O policy”) provides coverage for “loss” sustained by the policyholder in connection with any “claim” seeking damages for actual or alleged “wrongful acts,” subject to the policy’s terms and conditions.

The term “loss” is usually defined by such policies to include, among other things, “damages, judgments, settlements and defense costs.” Many policies also exclude from the “loss” definition certain types of payments by policyholders to resolve claims, such as fines and penalties, punitive damages and...
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