Do D&O Policies Cover Claims for Bodily Injury?

Most D&O policies have exclusions for bodily-injury claims. Often D&O exclusions extend to claims having an indirect connection to bodily injuries, such as emotional distress or consequential economic losses arising from bodily injuries.

As with the D&O property-damage exclusion, the rationale for the D&O bodily-injury exclusion is to avoid significant overlap with CGL insurance. CGL Coverage A provides insurance for most claims of accidental tangible bodily injuries. And CGL bodily-injury coverage normally extends to claims for emotional distress and economic losses if they arise from tangible bodily injuries. (For specifics, see Weimer et al., CGL Policy Handbook, 3d ed. Chapter 1 (Wolters Kluwer).)

Thus, the argument for a broad construction of a D&O bodily-injury exclusion is strongest when it falls within the scope of CGL Coverage A. However, the argument for a broad construction is weakest when it would fall outside the scope of CGL coverage – for example, if the claim is for emotional distress without bodily injury, or if the damage is intangible, or if the damage is not accidental.

Finally, the fact that parts of a complaint allege bodily injuries does not eliminate coverage for other parts of the complaint that claim other types of damage, such as economic losses not resulting from bodily injuries. If any part of a complaint is arguably covered by the policy, then the insurer normally has a duty to defend all the claims.

If you would like help evaluating the pros and cons of submitting a D&O or CGL insurance claim on behalf of the association, the experienced lawyers at Moeller Graf are available to assist. This information should be viewed as informational and not direct legal advice.