The U.S. Court of Appeals for the Second Circuit’s recent opinion in MBIA Inc. v. Federal Insurance Co., _ F.3d _, 2011 WL 2583080 (July 1, 2011), significantly impacts many key facets of D&O insurance coverage and claims under D&O policies. Namely, the MBIA court found that: subpoenas issued by the Securities and Exchange Commission (SEC) and the New York State Attorney General constituted “securities claims”; costs incurred by a special litigation committee formed to terminate derivative litigation are covered “defense costs”; and the insurers were liable for the cost of an independent consultant retained by MBIA as part of a settlement with regulators.
The MBIA court’s ruling that subpoenas are “claims” is arguably the most important, and is likely to have broad significance for policyholders across industry lines. The Second Circuit is, of course, not alone in finding coverage for these “claims” under standard D&O policies. Nonetheless, the decision is a boon to policyholders everywhere.
Subpoenas as ‘Claims’
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