Many companies and individuals that are facing investigations or subsequent enforcement actions by the Consumer Financial Protection Bureau (“CFPB”) will be forced to incur substantial sums to defend such claims, to settle such claims, and/or to pay any judgments. In many cases, companies and individuals may have insurance coverage to pay for such costs, such as Directors and Officers liability insurance (“D&O Policies”) and Errors and Omissions liability insurance (“E&O Policies”). The availability of coverage will turn on the specific contract language in any insurance policy and the specific nature of the CFPB matter at issue.
Policyholders that are potentially subject to CFPB investigations should:
- Review the terms in their current insurance policies and potentially seek to negotiate enhancements to coverage during their next renewal cycle.
- When faced with a CFPB investigation, take prompt steps to provide appropriate notice to insurers in order to preserve their rights to coverage.
- Be prepared to contest attempts by insurers to deny or limit coverage for CFPB investigations.
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