In a unanimous decision issued in late October, the Delaware Supreme Court reversed a trial court ruling and held that an appraisal action is not a “Securities Claim” as defined in the applicable directors’ and officers’ (D&O) liability insurance policy. Consequently, the court ruled that the insured was not entitled to coverage for defense costs and pre-judgment interest incurred in connection with an appraisal proceeding. In re Solera Insurance Coverage Appeals, 2020 WL 6280593 (Del. Oct. 23, 2020).
As regular readers of this column will recall, D&O liability insurance policies generally include multiple coverage sections. Typically, Section A provides coverage to insured individuals for non-indemnifiable loss—loss for which the insured entity either cannot or will not indemnify the insured person. Section B provides coverage to the insured entity to the extent that it has indemnified an individual insured. Section C typically provides entity coverage for claims asserted directly against the insured entity.