A key goal for 2020 is to review and negotiate your directors and officers (D&O) (and other) insurance policies to make sure they are as favorable as possible from a coverage and pricing perspective. (See Make a few small yet substantial plans: five steps to managing directors' and officers' liability insurance and other risks in 2020.) Enhancing policy terms and conditions puts the company and its directors, officers, and employees in the best position to maximize recovery if and when a claim hits. Keep in mind the five steps below to claim-handling success.
- Determine if a claim or potential claim exists. D&O policies contain broad definitions of a claim, which can range from a demand letter or lawsuit to a request to toll a statute of limitations. Some policies will also consider investigations to be claims, especially when made against directors and officers. Even if a matter does not amount to a claim under the policy definition, it may be a potential claim.
- Give timely notice under the primary and excess policies and consider other potentially applicable types of coverage. D&O (and other policies) typically have notice requirements - whether "as soon as practicable" after a claim is made or within a set time period such as 30 or 60 days. Some policies allow reporting of claims after a policy expires if the claim was made during the policy period. If a later claim alleges wrongful acts that are related to those in earlier claims (such as a follow-on lawsuit), the later claim may also be deemed a claim made under the same policy in which the earlier claim was reported. In addition, potential claims (notice of circumstances) are not required but usually are within the insured's discretion to report. The benefit of reporting a potential claim is to "park" it under a policy in case it materializes into an actual claim and in case there is a concern that an insurer may tack on an exclusion to the next renewal that could impact coverage for the potential claim. Notices of claims or potential claims should be given to both primary and excess insurers. Claims may also be covered under more than one type of policy such as D&O and employment practices liability, cyber, fidelity bond, professional liability, or commercial general liability.