In today’s economic climate, one of the most important issues concerning Directors’ and Officers’ (D&O) insurance is whether and to what extent the policy provides coverage for the costs of defending and responding to government investigations. Whether the investigation is commenced by a federal, state or local government agency, and whether it concerns financial, intellectual property, environmental or trade laws, the expense associated with properly responding can be very significant. There are often voluminous amounts of documents to review—both paper and electronic—and more often than not there are legal issues that require the retention of outside legal counsel.
D&O insurance policies vary considerably with regard to the scope of coverage for expenses associated with investigations. Some policies cover only formal investigative proceedings such as those commenced by a formal order of investigation. Others provide coverage as long as a target letter or subpoena has been issued to an individual. Still others provide even broader coverage, including costs associated with informal investigations.
