Directors and officers often act in multiple capacities, but often the directors and officers liability policy purchased to protect those individuals includes “capacity” exclusions barring coverage for claims relating to a director’s or officer’s conduct in any capacity other than the capacity insured under the policy at issue.

At times, insurance companies deny D&O coverage based on the insurer’s belief that the alleged wrongful acts were undertaken in the insured’s capacity in a different role or because the insured was acting in dual or multiple capacities. However, recent federal decisions in New York and California highlight that, depending on the policy language at issue, D&O insurance policies may not preclude coverage when an insured is acting in multiple capacities.

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