Vident Partners provides vetted directors and officers insurance expert witnesses for cases involving D&O towers, coverage for securities and fiduciary claims, conduct exclusions, indemnification and settlement allocation. Request a referral today.
Find a Directors & Officers Insurance Expert →Overview
A directors and officers insurance expert decides how a D&O program was built and how it should respond: what the policy and tower were meant to cover, how the market understood the wording, and how an insurer or broker should have behaved when a claim arrived. Disputes usually follow a securities suit, a stockholder case or a bankruptcy, when large defense costs and settlements meet a stack of primary and excess policies. This page covers D&O insurance practice. Reading a policy as a matter of law is for the court, general coverage work belongs to a coverage analysis expert, and the underlying fiduciary conduct to a corporate governance or business management expert.
The expert reads the policies and endorsements, broker placement files, underwriting submissions, notices of claim, reservation of rights letters and the settlement record. The placement file often shows what the parties understood at the time of binding, which can matter as much as later arguments about the wording.
D&O coverage is usually sold in layers: a primary policy and excess policies that follow its form, sometimes with a separate Side A layer for individuals when the company cannot indemnify them. Exhaustion, drop-down and follow-form wording are where many disputes arise. The expert explains how a market participant would read the layers and how the program was marketed. Claims and notice issues follow: when a claim was first made, whether related claims go back to an earlier policy, and whether notice was timely.
Delaware law sets a clear baseline for many public companies. Section 145 gives a corporation power to indemnify directors and officers in third-party and derivative actions, under stated limits, and allows expenses to be paid in advance of final disposition on an undertaking to repay 1. It also addresses insurance.
The key decision is RSUI Indemnity v. Murdock. The Delaware Supreme Court addressed D&O coverage for settlements following a Court of Chancery ruling that executives had engaged in fraud and breached their duty of loyalty 2. It considered whether a policy covering losses from fraud is unenforceable as contrary to Delaware public policy, whether the policy's fraud provision defeated coverage and how the allocation provision applied, and it affirmed the Superior Court on each 2. It also applied Delaware law to a Delaware corporation's policy under the most significant relationship test 2. Other states read this differently, so a report begins with the governing law.
Most policies exclude fraud or illegal profit, but the wording matters a great deal. Many require a final adjudication in the underlying action, and a settlement may never reach it. The expert can show how those clauses have changed in the market.
The insured versus insured exclusion prevents collusive suits between a company and its directors. Bankruptcy trustees, receivers, derivative plaintiffs and former officers each raise questions under that exclusion, and carve-backs vary by form. Allocation is another fight. When a settlement covers both insured and uninsured parties or claims, the policy's allocation clause controls, and in Murdock the court addressed the application of the allocation provision and the larger settlement rule 2.
Rising oversight claims have made D&O more important. Delaware decisions such as Clovis Oncology say that when regulation governs a company's mission critical operations, the board's oversight function must be more rigorously exercised 3, and McDonald's confirmed that corporate officers owe a duty of oversight 4. Those claims can involve bad faith, which is exactly where indemnification may be limited, so Side A coverage and conduct exclusions come into play. A careful expert reads how those claims interact with the policy and leaves the merits to the governance witness.
Some cases are against the broker. Did the placement give the client adequate limits, a competitive program and current wording? What did the client tell the broker, and what was recommended? A benchmark of peer limits may be useful, though it is a guide only. Errors and omissions claims look at the file and at what a reasonable broker would have done at the time.
Look for a senior D&O underwriter, claims executive or specialty broker with direct experience on public company programs, or a former executive of a major financial lines insurer. No license is specific to the field. Ask about experience with the same size of company, the same form family and the same period, since wording has changed over time. Custom testimony must rest on more than memory, and each opinion must stay within what a reliable application of the expert's method supports 5. Keep the legal conclusion for the court.
In RSUI v. Murdock, the Delaware Supreme Court affirmed rulings that Delaware public policy does not preclude D&O coverage for losses occasioned by an insured's fraud.
Case Types
Coverage disputes after securities suits
Conduct exclusion and final adjudication
Insured versus insured disputes in bankruptcy
Settlement allocation
Excess tower exhaustion and drop-down
Related claims and prior acts
Broker errors and omissions in placement
Side A and indemnification disputes
Qualifications
Related Specialties
FAQ
Look for a senior D&O underwriter, claims executive or specialty broker with direct public company experience. Ask about the same form family and period, since wording has changed.
It depends on the law and the wording. In RSUI v. Murdock, the Delaware Supreme Court affirmed that Delaware public policy did not bar coverage on the facts there. Many policies have conduct exclusions that require a specific kind of adjudication.
It bars or limits claims brought by one insured against another, to prevent collusive suits. Bankruptcy trustees and derivative suits raise special questions, and carve-backs vary by form.
When a settlement covers both insured and uninsured parties or claims, the policy's allocation clause decides how it is split. In Murdock, the court addressed the larger settlement rule.
Section 145 allows expenses to be paid in advance of final disposition on an undertaking to repay, under stated limits. Corporate documents may add rights.
In general, directors and officers insurance expert fees are determined by the expert themselves, based on a variety of criteria. Among those criteria are experience, the size of the program, the number of layers, the volume of underwriting records and the amount of testimony. Vident does have some influence over expert fees by comparing experts within a specialty, but ultimately it is a personal decision by the expert.
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