Most D&O policies contain, either within the basic policy form or added by endorsement, exclusions for claims based on or arising out of the facts and circumstances of underlying litigation that has occurred or that is pending as of the inception date of the policy. Many policies also contain exclusions for claims covered by or reported under previous D&O insurance. The D&O application may also contain exclusionary language regarding circumstances likely to give rise to a claim. When these other types of exclusions are present, it may appear that a prior-and-pending-litigation exclusion, like the example below, is redundant and imposes no further restriction of coverage.
The Insurer shall not be liable to make any payment for Loss in connection with any Claim: litigation made as of the Pending or Prior Date set forth in Item 5. of the Declarations, or alleging or derived from the same or essentially the same facts as alleged in such pending or prior litigation.
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