Section 9.40 “No Action” Clauses

• Library: Insurance Practice 2015

Another feature of many director and officer policies is a “no action” clause. This clause prohibits suits brought directly against the insurer until the insured’s obligation to pay has been finally determined. If a settlement agreement is not a breach of the insured’s duty to cooperate, the “no action” clause will not insulate the insurer from coverage. See Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Seafirst Corp., No. C85-396R, 1987 U.S. Dist. LEXIS 14394 (W.D. Wash. Dec. 23, 1987). If the insurer...