Judge rejects challenge to D&O exclusion; Case offers rare guidance on 'insured vs. insured' exclusion.(News)(directors and officers liability insurance)(Brief Article)

Byline: DAVE LENCKUS

ORLANDO, Fla.-A rare judicial clarification of the insured vs. insured exclusion in directors and officers liability insurance is a victory for insurers that highlights potential coverage problems for policyholders in other types of D&O coverage disputes, insurer attorneys say.

The decision could also be beneficial, however, to some insurance buyers embroiled in D&O coverage disputes, according to one policyholder attorney.

The Sept. 10 decision by U.S. District Court Judge Patricia C. Fawsett in Orlando, Fla., interprets two provisions of a typical D&O coverage exclusion that few-if any-other courts have previously addressed.

Judge Fawsett ruled that the insured vs. insured exclusion bars coverage when a policyholder faces a securities suit from a former director and officer. It is …