Does D&O cover a claim brought by the company itself?

Most often yes – and that matters, because in Latvia the company itself is the most typical claimant against its own board member. The so-called insured vs insured exclusion rules out claims brought against an officer by the insured company itself or by another insured person, but in modern European wordings it is almost always narrowed down to US claims only. So the question is not "is there an exclusion", but "is it limited to the US" – and what the policy defines as the company. In this scenario the Side A part responds, because a company that is itself bringing the claim will not indemnify its own board member.

When this answer applies to your situation

• The company is wholly owned by a parent company or by a single shareholder.
• The company's owners have changed and the new management is reviewing earlier decisions.
• The board includes both owners' representatives and salaried managers.
• The group has internal transactions between related companies.

What can change the answer

• Whether the insured vs insured exclusion is limited to US claims or worded broadly.
• What the policy includes in the term "company": a parent company's claim is excluded only if the parent is itself an insured person.
• Whether there are provisions for claims brought by an insolvency administrator or a former board member – those usually stay covered.
• Whether the claim is brought under Section 169 of the Komerclikums on behalf of the company, or under Section 170 in a creditor's interest.
• In which jurisdiction the claim would be brought.

What to check in the policy or quote

• The territorial scope of the insured vs insured exclusion
• How the range of insured persons and companies is defined
• Whether group companies are included in the definition of the policyholder
• Whether the exclusion has provisions for claims by the administrator and by former officers
• The Side A deductible, because that is the part that responds in this scenario

The typical mistake

Two opposite mistakes. The first: assuming a claim will always come from outside – in practice the most frequent claimant against a former board is the company itself, after a change of owners or management. The second: assuming the insured vs insured exclusion knocks out this cover in Latvia – in European wordings it usually applies only to US claims. In both cases the answer is simple: read the wording, do not assume.

Example

A situation typical in practice (generalised example, not a specific client)

A typical situation: a board member of a 100% subsidiary is covered by a policy issued on standard terms. A year later the parent company reviews one previously concluded transaction and brings a claim against the board member. If the exclusion is narrowed to US claims, the cover responds. If the quote uses a broad wording typical of the US market and the parent company is an insured person under the policy, this very scenario can fall outside the cover – which is why I check the wording before signing.

Related content

• Directors' and officers' liability insurance (D&O)

This is not individual insurance advice; actual cover always depends on the chosen insurer's wording and the special conditions of the policy.