Buzz Archive:
Warranty Letter Provides Basis to Reject D&O Defense Obligations, According to Tenth Circuit

by Matthew L. Jacobs and Daniel I. Weiner of Jenner & Block LLP, 1/27/2010

Policyholders seeking to obtain Directors & Officers ("D&O") and many other types of liability coverage are often confronted with the question of whether, apart from agreeing to the terms of the policy, they should also acquiesce to an insurer's request that they sign a separate warranty letter at the time of policy placement. If faced with such a request, a prospective insured should proceed with caution. Rather than simply restating conditions in the policy, warranty letters are separate agreements that insurers often try to use to impose different, less favorable, conditions upon the insured. In most circumstances, there is no legitimate reason for an insurer to request this type of separate agreement, when they are already protected pursuant to the policy's terms and conditions.

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