Insurance matters can be complex, and policies are often misunderstood. In a recent Fenwick CLE program, partner Heidi Lawson and counsel Mallory Goodwin shared practical insights that combine legal understanding with real-world considerations to help in-house counsel navigate insurance policy terms, negotiate effective contract provisions, and respond to claims in a timely and strategic way.
Below are some key takeaways from their presentation:
The first step for in-house counsel is to distinguish between the major types of insurance available to businesses. Directors and officers (D&O) insurance protects company leaders and often the entity from claims over management decisions, while errors and omissions (E&O) insurance, also called professional liability, covers service delivery and representations to customers. Commercial general liability (CGL) insurance addresses bodily injury and property damage from business operations, employment practices liability (EPL) insurance handles employee claims such as discrimination or wrongful termination, and cyber liability covers losses and liabilities from data breaches, though terms vary. Other types of coverage include property, auto, workers’ compensation, crime bonds, and key person life insurance
Insurance policies differ from standard contracts and require careful review of key sections. The declarations page outlines the basics, while the insuring agreement sets the boundaries of coverage, and endorsements modify terms as needed. Coverage is triggered either by the date of the event (occurrence-based, common in CGL) or by when the claim is made (claims-made). Definitions such as “insured,” “loss,” “claim,” and “wrongful act” can significantly affect scope, and broader language may offer more protection. Counsel should also check for critical exclusions, confirm all necessary parties are covered, and determine whether the policy permits choosing defense counsel.
When negotiating insurance provisions in contracts, in-house counsel should seek approval from the insurer for any terms agreed upon by the parties, as some requested provisions may be unachievable in the market. Liability caps must preserve legal liability for coverage to apply, and certificates of insurance are not reliable proof of coverage compared to endorsements or the policy itself. Waivers of subrogation must be added by the insurer, and counsel should understand that named insured status carries obligations that may impact coverage, while additional insured status grants rights without those burdens. Using blanket additional insured endorsements may reduce administrative errors, and primary and noncontributory clauses establish which policy applies first but may meet resistance from insurers
Effective claims management starts with a clear process that specifies who to inform and when. Timing rules differ between claims made and occurrence policies, and late notice may void coverage in some cases, depending on jurisdiction. Consider avoiding language that could harm coverage, protecting sensitive information through NDAs or verbal updates, and reviewing insurer responses carefully, including acknowledgments, reservations of rights, or denials, to determine next steps.
The insurance market is developing innovative products to address complex business risks. These include representation and warranty coverage for M&A disputes, litigation buyout policies for known exposures, tax insurance, and IP collateral insurance for pledged intellectual property. Custom manuscript policies are used to cover unique risks such as AI, software performance guarantees, or cryptocurrency operations. Captives are becoming more common, especially in tech and shared economy sectors, aided by changes in Delaware law. Insurers are also using AI in underwriting, claims, and fraud detection, but this area faces growing regulatory oversight.
In-house counsel may enhance their risk management position by performing a thorough audit of existing insurance policies, ensuring definitions and terms align with operational risks, and negotiating broader coverage for areas like investigations. They should consider matching contractual insurance requirements with actual policy provisions, educating internal teams on when to notify insurers, and remaining informed about developing coverage options and industry trends. Specialty insurance lines such as D&O, E&O, and cyber are often highly negotiable and may be tailored to business needs, typically without increasing premiums except where investigation coverage is expanded.
To view the full webinar, register here and click the “On-demand program access” link.