Insurance Coverage for Entity Investigations
The costs of responding to a government subpoena or investigative demand can be substantial. The broadly worded demands for information or testimony typically require burdensome searches through mountains of documents, data, and electronically stored information.
The costs of responding to a government subpoena or investigative demand can be substantial. The broadly worded demands for information or testimony typically require burdensome searches through mountains of documents, data, and electronically stored information. With the looming threat of civil or administrative actions against the company and its executives—and possible referral to the Department of Justice for criminal proceedings—a misstep in responding to a subpoena or investigative demand can be devastating.
As subpoena-response costs rise into the millions of dollars, the question inevitably rises: Will the company’s director’s and officer’s (D&O) or professional liability insurance cover the costs of responding to the subpoena or civil investigative demand? The answer to this question is not always clear. Given the high stakes, insurers and policyholders frequently litigate this issue, with courts across the country reaching different outcomes depending on the unique terms, definitions, and conditions of the policies at issue. Two recent decisions addressing insurance coverage for the costs of responding to government subpoenas—one finding coverage and the other rejecting it—provide helpful guidance for policyholders seeking coverage for these costs.
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