Two Brokers, Two Insurers, No D&O Coverage!

It has been several decades since the introduction of claims-made liability insurance policies. Although claims-made forms were reluctantly accepted, problems and disputes continue over the reporting of claims under these policies. An example of claims-made policy pitfalls is this real-life case involving two major insurance companies, two major insurance brokerages, and one well-meaning but unsophisticated insured.

To illustrate how claims-made policies can result in a claims fiasco, consider the following example. The insured, a large, highly regarded not-for-profit organization, had been insured under an Association sponsored D&O liability policy for several years. The policy provided a broad range of coverages, including D&O and employment practices liability written on a claims-made basis.