In-House Counsel has an overview of the recent trends in court decisions on director and officer liability insurance coverage. In particular, the article addresses the increasing number of cases in which alleged misrepresentations in the insurance application (usually involving financial information that a company is forced to later restate) have led insurers to rescind their policies.

Quote of note: “The remedy of rescission is a response to corporate fraud. The very reason corporations seek outside directors is to attempt to pre-empt any such fraud. Proliferation of the rescission remedy as to innocent directors and officers will discourage qualified outside directors from accepting such positions, thereby increasing the very conduct the rescission remedy seeks to discourage.”

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