D&O Carrier Escapes Liability for Millions in Defense Costs
An insured sued its insurer on a claims-made executive and organization liability insurance policy, alleging breach of contract and seeking to recover $2.5 million in defense costs incurred on behalf of the insured's vice-president for a five-year period. The insured defended its executive in a criminal investigation by the Department of Justice involving allegations of market allocation and price-fixing. The court held that, because the insured failed to provide timely notice of a claim, the carrier did not have an obligation to cover the defense costs. The court found the substantive content of the DOJ’s search warrant affidavit that was under seal constituted a claim against an insured person and notice was untimely.