Navigating The Seas Of D&O Policy RescissionSeverability provisions may provide a false sense ofsecurity for corporate buyers











eliminate

XX



Does any director have knowledge of an act which might giverise to a claim under the policy?







Rescission is not a quick fix.









The rescission standard.





National UnionFire Insurance Co. vs. Federal Deposit Insurance Corp.

andeither

Home Insurance Company vs.Spectrum Information Technologies Inc.







Understanding D&O SeverabilityProvisions













Severability does not eliminate the risk ofrescission.





as a wholeHome Insurance Co. vs. Dunnab initio



What Can Insurers Do?





First, avoid waiver of the right to rescind.

Additionally, insurers must obtain an understanding of theapplicable state law.

Most importantly, insurers must be aware of the potentialfor bad faith claims.

Reproduced from National Underwriter Edition, September 16,2004. Copyright 2004 by The National Underwriter Company in theserial publication. All rights reserved.Copyright in this articleas an independent work may be held by the author.