Observers: Already-Battered D&O Lines Could Face Upheaval From Coronavirus Litigation
“There is definitely going to be litigation,” said R.J. Lehmann, R Street Institute director of finance, insurance and trade policy. “[Insurers] are expecting significant action.”
There has been an initial sprinkle of D&O coronavirus cases, but many more are likely, Lehmann said. The industry sees the outbreak as another cost driver for the directors & officers lines.
D&O policies are a type of liability insurance, usually protecting companies from shareholder lawsuits and individuals from claims made against them while serving as a director or officer of a company. Covered acts normally include the insured’s errors, omissions, misstatements, misleading statements, neglect or breach of duty.
In addition to shareholder litigation, Lehmann anticipates a wave of employee class actions.
“You can absolutely see where employee class actions will come from,” he said. “If you were one of the big supermarkets and if you acted in any way that could be considered negligent (such as) not taking the proper precautions, not providing (employees) with gloves and masks. Then you are absolutely on the hook should they get together and file a class-action suit.
“Workers’ comp usually takes care of it all,” he said. “But if you act negligently. If, for instance, there was a civil order and you defied it. Then yeah, you’ve given employees an opportunity to file class actions.”