Updates/Latest News

Updates/Latest News

USA: D&O Coverage denied for $118 Million DOJ Settlement Because of Professional Services Exclusion – Opinion of COURT OF APPEAL OF THE STATE OF CALIFORNIA, FIRST APPELLATE DISTRICT, DIVISION TWO

Companies offering professional services, particularly, IT/ITES companies should be cautious of any broad/ absolute exclusions like professional service exclusions, cyber exclusions, and pollutions exclusions etc.


1.    Informed decision-making helps. Anticipating Coverage Requirements and understanding what is available under various policies
2. Definition of professional services: “the D&O policy’s “professional services” term is undefined and has a more expansive common-law meaning than what may be proposed by the insurer in defining the scope of covered services under an E&O policy”
3.    Avoid absolute/ broad exclusions
4.    If it is not possible to avoid exclusions, negotiate to carve back coverage, whatever is possible like defence costs and derivative settlements etc.


Link to the judgement here .  Please note that the opinion in this case is marked “NOT TO BE PUBLISHED IN OFFICIAL REPORTS”