When corporate transactions engender shareholder litigation, Directors’ and Officers’ liability insurers all too often invoke the so-called “bump-up” exclusion to bar coverage of such claims. These provisions, common in D&O policies, purport to exclude coverage for settlements or judgments that effectively increase the deal price in acquisitions, the theory being that D&O insurance was not intended to act as a backstop to the share price obtained by management in selling a company. D&O insurers have for years tried to expand the application of these provisions in attempts to narrow Side B/C coverage for M&A transaction-related losses.
