D&O claims grow amidst the coronavirus

What distinguishes D&O liability insurance from other coverages concerning COVID-19 is the expansive range of claims that may emerge. (Photo: Shutterstock)

Months of government-ordered closures and restrictions on U.S. businesses and requirements that consumers stay home to halt the spread of COVID-19 has taken its toll on the economy.  While headlines have primarily focused on pressing issues regarding business interruption coverage, claims against directors and officers (D&O) in connection with COVID-19 have also been on the rise.

What distinguishes D&O liability insurance from other coverages regarding COVID-19 is the expansive range of D&O claims that may emerge. D&O coverage commonly provides, among others, the following main protections:  Side A coverage, for the wrongful acts of directors and officers whom the company does not or cannot indemnify; Side B coverage, for reimbursement of the company’s indemnification of its directors and officers; and Side C coverage, for the company’s wrongful acts. A wrongful act often is defined to include any breach of duty, neglect, error, misstatement, misleading statement, omission, or act of a director or officer or the company.