Commenting on recent judicial rulings, he said that generally decisions have run in favor of insureds when they ask for advances to cover litigation defense costs.

Among ongoing areas for dispute, Mr. Passannante said, are arguments over when policy limits are exhausted.

Pamela Hans, an Anderson Kill attorney, said there had been about 300 lawsuits since 2007 related to subprime mortgage problems. The number and rate of such actions "is really quite astonishing," she said.

She mentioned borrower class-actions alleging predatory lending, as well as securities cases involving charges of fraud, insider trading and fiduciary duty failure.

Targets for such actions, according to Ms. Hans, include rating agencies, institutional investors, securitizers who package mortgages, accountants, appraisers and brokers.

Coverage called into play, in addition to D&O protection against executive liability, management liability and partner liability, includes errors and omissions protection against negligence.

Insureds may find that legal help is needed, she said, because "insurance companies are not so willing to pay claims since they are impacted in the [subprime] meltdown."

Janet B. Dreiffus, a senior vice president and director of claims at the Hilb Rogal & Hobbs insurance brokerage, said the 2008 D&O market has some $1.5 billion in capacity, with price reductions averaging 5-to-10 percent.

But for clients in the financial industry sector with possible subprime issues, clients with claims activity, as well as businesses that are under investigation or in the process of an acquisition, there may be "double-digit" increases and demands to double their deductible, she said.

At this point, "the feeling is that the hard market is around the corner. The question is what will be the trigger," said Ms. Dreifuss.

Among new market developments, she mentioned that clients are now demanding and receiving their contracts within 30 days, and are also getting excess coverage contracts within 30 days of their primary coverage. Ms. Dreifuss said customers are also obtaining enhancements and much more favorable language in their contracts.

She also noted an increase in securities class-actions, increases in derivative claims and more regulatory actions.

The likely results, according to Ms. Dreifuss, will be more complex litigation, higher settlement values and higher defense costs. She put the average class-action settlement at $33.2 million

Joseph M. McLaughlin, a partner at Simpson Thacher & Bartlett, said that life sciences companies are the favored target of shareholder suits because such firms are vulnerable to sudden setbacks–particularly in the drug development process.

Josh Gold, a partner with Anderson Kill's New York office, warned that in processing a claim, insureds must be on guard against a variety of tactics used by insurer attorneys to beat back or reduce their demands.

It is rare, he noted, "that you get a commitment as to whether coverage is applied," and he warned that policyholders must beware of "someone building a false and phony record." Any inaccurate statements must be answered with a letter of correction, he said.

While policies contain clauses that require cooperation with the insurer, this does not mean providing any defense attorney work product, he said, explaining that such an action could strip away attorney-client privilege that protects the material from plaintiff attorneys' view.

Mr. Gold also advised that insureds should send copies of defense bills to their excess insurer even before that carrier gets involved to avoid later "Monday morning quarterbacking."

Among his other advice was that insureds not execute any interim funding agreements during the course of a case, and avoid agreeing to any language that would send funding disputes to arbitrators.