Some underwriters for directors and officers liability are moving exclusions to a different location within the policy, which could make them more difficult for policyholders to dispute in court, market observers said.

At the same time, companies buying D&O cover are seeking—and in many cases receiving—a variety of favorable provisions and changes in terms, a panel of experts said at a symposium presented by the Professional Liability Underwriting Society this month in New York.

Some D&O underwriters have begun to restrict coverage by writing exclusions into the policy’s definition of loss, rather than the traditional method of attaching coverage exclusions to the policy itself, said Heidi Lawson, international counsel at Debevoise & Plimpton L.L.P. in London. That seemingly trivial change is important because, if a coverage dispute arises later, it shifts the burden of proof from the insurer to the policyholder, she said.

“Now all of a sudden the insured has to prove that the exclusion, because it’s within the definition of claim, doesn’t apply,” Ms. Lawson said. With a traditional “exclusion, it’s on the insurer to prove the exclusion.”

In other areas, D&O insurance buyers are seeking a bevy of coverage enhancements and carve-backs, buoyed by aggressive competition among underwriters and soft market conditions.

Buyers and brokers are attempting to make their own changes to policies’ definition of claim section. Many companies want the D&O policy to explicitly state that an investigation or a subpoena by the Securities and Exchange Commission is a claim, said Janet B. Dreifuss, a New York-based senior vp at broker Alliant Insurance Services Inc. Case law is ambivalent on this question, she said.

A policyholder that is the subject of an SEC subpoena may find its D&O insurer refusing coverage until it receives an official “notice of claim,” which can be difficult to obtain from the SEC, said Priya Cherian Huskins, senior vp and partner at Woodruff-Sawyer & Co. in San Francisco.

“The SEC doesn’t care about the D&O insurance contract,” she said. “The SEC cannot issue a subpoena in the absence of a formal order; if there’s a subpoena, there’s a formal order. You may not see it right away and I don’t understand why that means I don’t get coverage for six months.”

Ms. Huskins and others said buyers also are seeking carve-backs in D&O policies’ pollution exclusions. The SEC issued guidance in January recommending that companies consider the effects of climate change and related laws and regulations when disclosing to investors issues that could affect their bottom line.

Ms. Huskins said she is concerned that D&O underwriters could use a policy’s rather broad pollution exclusion to refuse coverage for a shareholder lawsuit alleging inadequate climate-related disclosures.

“This is a risk you might mention to a board and the eyes start rolling right away,” she said. “I think this is one where people might be caught flat-footed.”

Insurers are concerned that companies might convert pollution losses into D&O losses through derivative suits, said Kevin P. Gadbois, a New York-based divisional executive vp at Great American Insurance Group. Shareholders for a company hit with a pollution fine could file a derivative suit, alleging the pollution was the result of mismanagement, and essentially recover the fine from the D&O insurers, he said.

Panelists said brokers and buyers are securing provisions that provide coverage for extradition and that water down policies’ fraud exclusions.

Observers at the conference said the only provisions D&O policyholders cannot buy in the current market are multi-year policies and guaranteed renewals.