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prior and pending litigation exclusion

An exclusion found in most directors and officers (D&O) liability policies that precludes coverage for claims from litigation that was pending prior to the inception of the policy. For example, assume that litigation was pending against the corporation—rather than individual directors—prior to the inception of a D&O policy. If the suit was later amended (following inception of a new policy) so that it also named the firm's directors, the prior and pending litigation exclusion would eliminate coverage for the claim against the directors. The intent of the exclusion is to avoid exposure for the "burning building." However, insurers will sometimes agree to remove this exclusion when a policy is renewed.


Links for IRMI Online Subscribers Only: PLI X.E; D&O Coverage Guide

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