Some “D&O policies” (Directors and Officers liability policies) exclude claims for losses “arising out of” the prior wrongful acts of officers or directors. The Eleventh Circuit recently interpreted the phrase “arising out of” broadly, finding that it is not a difficult standard to meet. Zucker for BankUnited Financial Corp. v. U.S. Specialty Insurance Co., -- F.3d -- ,  2017 WL 2115414, *7 (2017) (determining that under Florida law “‘arising out of’ . . . has a broad meaning even when used in a policy exclusion”); but see Brown v. American Intern.

The scenario: You have been injured and PretendCorp is liable to you in the amount of $100,000. PretendCorp has a commercial general liability insurance policy (“CGL”), which covers your claim. The CGL has a $20,000 self-insured retention (“SIR”) clause that states that PretendCorp is to directly pay you before the insurance company is liable for the remaining amount of the claim. PretendCorp files for federal bankruptcy protection and, as a result, is not required to pay the SIR. Is the insurance company still liable for your claim?