CORPORATE | The Supreme court on nullity of the D&O insurance coverage in the event of voluntary payment by the company

On 8 June 2026, the Italian Supreme Court (Corte di Cassazione) issued an Order No. 18458/2026 helding that clauses contained in the so-called “side B” D&O insurance policy under which the insurer undertakes to indemnify a company for amounts that it has paid to one of its directors or officers without being under a legal or contractual obligation to do so are void for lack of an insurable risk pursuant to Article 1895 of the Italian Civil Code.

The Court reaffirmed the distinction between “side A” D&O policies – which provide coverage directly to the company’s directors or officers for amounts they are required to pay to third parties as compensation for wrongful acts committed in the performance of their duties –  and “side B” D&O policies, which provide insurance coverage to the company for amounts it pays to indemnify its directors or officers against claims for damages brought against them by third parties.

The Court observed that, under Italian law, companies are generally under no obligation to indemnify directors or officers against liabilities owed to third parties. Accordingly, a purely voluntary payment does not give rise to an insurable risk. The decision confirms the fundamental principle that, under Italian insurance law, only losses arising from a genuine insurable risk – namely one that is future, uncertain and fortuitous – may be validly covered by insurance.

Newsletter n. 120 – July 2026