In Medical Mutual Ins. Co. of Maine v. Indian Harbor Ins. Co., the U.S. Court of Appeals for the First Circuit held that when a company is the sole named defendant in a suit, that company cannot recover its costs and liabilities under a directors and officers (D&O) insurance policy, even when the complaint against the company alleges wrongful acts by directors or officers of that company. Judge Bruce Selya, for the unanimous panel, found that “D&O policies exist to fund indemnification covenants that protect corporate directors and officers from personal liability, not to protect the corporation by which they are employed.” If the company were able to receive coverage even when no director or officer had been named in the suit, it “would . . . transmogrify D&O policies into comprehensive corporate liability policies.”
Although the First Circuit’s opinion does not bind courts in Virginia, the Court noted other courts in Illinois and New York that came to identical conclusions, so the weight of opinion appears to be headed that direction.
Posted by merrittgreen 
