'Disgorgement' Payments May Be Insurable In NY

By James Westerlind and Christopher Koenig (July 10, 2018, 2:34 PM EDT) -- Many states prohibit the insurability of awards against insureds that represent the disgorgement of ill-gotten gains or restitution on public policy grounds.[1]

New York also generally prohibits the insurability of amounts that an insured must pay which represent the disgorgement of ill-gotten gains.[2] But in J.P. Morgan Securities Inc. v. Vigilant Ins. Co.,[3] the New York Court of Appeals (the highest court in the state of New York), held that the insured had stated a viable claim for coverage under its directors and officers liability policy for amounts that the SEC required it to pay as "disgorgement" because, according to the...

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