The Federal District Court for the District of Maine recently held that a discrimination suit was not covered by a directors and officers liability insurance policy where the suit alleged corporate actions through a company’s officers and directors, but named only the company as a defendant. Medical Mutual Insurance Company of Maine v. Indian Harbor Insurance Company, Civ. No. 08-48-P-H (D. Maine Nov. 19, 2008).

The former CEO of a mutual insurance company sued the company for disability discrimination. The company settled the lawsuit and then sued its D&O insurer for a declaratory judgment that it was covered for the settlement under its D&O policy.

The policy provided coverage for claims against an “Insured Person,” defined as any director or officer. Only the company was named as a defendant in the suit and the prayer for relief was directed against the company. However, the complaint’s factual allegations occasionally referred to actions by a board committee or the board of directors and made accusations against the company “acting through its agents, representatives, and members of its Board of Directors.”

The court ruled that no “claim against an Insured person” was made, noting that a reference in the “prayer for relief” to “[the company], its agents, employees, and successors” was mere “boilerplate.” The court further noted that the outcome “is consistent with the purpose of a Directors and Officers policy, to give those persons insurance coverage to protect them from personal liability.” (Emphasis in original).

For a copy of the decision, please click here.