Legal Battle Over D&O Insurance Coverage Expands to Include Malpractice Lawsuit

Insurance companies that cover Texas businesses are engaged in a legal battle over the issue of directors and officers (D&O) insurance coverage. The case, In Re Illinois National Insurance Company, is currently before the Texas Supreme Court and has broader implications for the business community in Texas [be020e51] [55a8d7bb].

The insurance companies argue that settlement agreements should not be binding on them and that insurance policies purchased for directors and officers are worthless and ineffective unless they endure trials and suffer judgments against themselves. They claim that accepting the insurance industry's position would be detrimental to Texas businesses. On the other hand, the Dallas Regional Chamber has filed an amicus brief with the court, asserting that insurance coverage is crucial in protecting directors and officers and that rejecting it would discourage settlement agreements, leading to prolonged litigation. The chamber emphasizes the importance of clarifying that Texas law favors businesses and that insurance coverage is vital and effective in safeguarding directors and officers [be020e51] [55a8d7bb].

This case highlights the ongoing dispute between insurance companies and Texas businesses regarding D&O insurance coverage. The insurance companies argue that the policies are ineffective unless directors and officers put themselves in financial peril, while the Dallas Regional Chamber advocates for the importance of insurance coverage in protecting directors and officers and promoting settlement agreements over prolonged litigation [be020e51] [55a8d7bb].

In a related development, a law firm in Connecticut is facing a similar issue regarding insurance coverage. The law firm Evans & Lewis LLC and partner Douglas J. Lewis are involved in a malpractice lawsuit and are seeking coverage from their malpractice carrier. However, the insurer argues that the law firm should lose the breach of contract suit because they were already in the early stages of battling a professional misconduct claim when the relevant policy went into effect. The insurer is seeking summary judgment in the Connecticut Superior Court [37a485a9].

This case in Connecticut adds to the ongoing debate surrounding insurance coverage for professional liability claims. It raises questions about when coverage should apply and whether ongoing disputes at the time of policy inception should affect the availability of coverage. The outcome of this case could have implications for similar disputes in other jurisdictions [37a485a9].