When A Denial Of Recovery-Based Insurance Claim Is Invalid

By Stephen Raptis and Emily Buchanan (September 16, 2021, 5:34 PM EDT) -- Liability insurers for directors and officers, as well as for errors and omissions, frequently deny coverage for losses that they assert are uninsurable because they are based in restitution, disgorgement or a similar theory of recovery.

Although courts differ in how they define restitution and disgorgement, both terms typically connote that the insured received something of value to which it was not entitled and was required to give it back. Many restitution or disgorgement-based denials are accompanied by little or no legal or factual analysis.

As with any insurance claim, the starting place for determining the extent of coverage for a...

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