Balance sheets across the globe are as red as the alleyways of Pamplona, but it’s not bulls doing the running—it’s bears. The plethora of red ink is making shareholders and regulators see in Technicolor, and they’re setting their sites on directors and officers, who are increasingly being held liable for massive corporate losses and fiduciary malfeasance.

As accusations of fraud, carelessness and recklessness morph into shareholder lawsuits, regulatory scrutiny and criminal investigations, directors and officers are turning to their D&O insurance for coverage. They might be more exposed than they think, though. On average, only 37% of private companies report insuring their directors and officers, and some companies—public and private—that have purchased coverage are unable to keep it because of liquidity problems, according to Chubb. Beyond that, many insurers have implemented language that limits coverage to reduce the bleeding that occurs as a result of criminal investigations.

“The extent of coverage for criminal proceedings remains one of the perennially disputed claims issues,” says Kevin LaCroix of Ohio-based OakBridge Insurance Services and the D&O Diary. With costs escalating for pre-indictment investigations and defense actions, many insurers now limit D&O coverage for criminal proceedings to post-indictment matters. Moreover, overhead costs of an insured defendant company are often excluded from the definition of covered defense costs.

Further complicating matters are the multiple venues under which a corporation’s directors and officers can be investigated (and can run up costs). Not only might there be a criminal investigation to defend against and comply with, there can also be civil lawsuits and regulatory scrutiny that demand pricey legal counsel and responses. Determining which expenses go with which action (and which are therefore covered or excluded) can embroil a claims officer in a nasty battle.

“The critical question,” says LaCroix, “will be whether or not the particular circumstances presented constitute a ‘claim.’” And that might be difficult when multiple insurers are involved, which happens frequently. “Many, if not most, of the auction rate securities lawsuits…involve multiple corporate subsidiaries as defendants,” says LaCroix. Moreover, D&O insurance “isn’t written on a common policy form,” says Dan Bailey of Bailey Cavalieri, a top law firm based in Ohio. “Each D&O insurer has developed its own form.”

To wit, most D&O policies do define what qualifies as a claim, and that’s usually pretty broad. It typically includes written demands, civil and criminal proceedings, and administrative, regulatory or investigative undertakings.