Insurance: Lower Court’s Rejection Of D&O Insurance Reimbursement Of Legal Expenses Was Erroneous

Non-Indemnifiable Legal Expenses Are Usually Recouped Under D&O Policies, With Restitutionary Damages and Insurance Code Section 533 Exclusions Not Dictating Otherwise.

               In Jasper v. Chubb National Ins. Co., Case No. H050804 (6^th Dist. Nov. 12, 2024) (unpublished), a D&O insurer denied a CFO reimbursement for legal expenses in a federal securities case and related cases where the CFO was found liable.  He claimed that legal expenses were reimbursable under non-indemnified claims of the D&O policies.  The lower court disagreed, invoking restitutionary damages and Insurance Code section 533 exclusions to justify the reimbursement denial.  The Sixth District reversed, engaging in analysis of these exclusions and the general nature of D&O insurance which are helpful to litigants and practitioners representing directors or officers under D&O policies.