"When the insurance companies see more and more money being affected by these backdating stock options scandals, they have more and more reasons to try to find reasons to deny coverage," said R.Mark Keenan, a partner at New York law firm Anderson Kill & Olick.At that point, an insurance company might try to recoup its costs -- a relatively rare event, according to Smith.

Insurers of directors backdating claims face Where to meet a proportional midget for dating

Alexander has been apprehended and is being extradited.

Only if a person is found guilty of wrongdoing, whether by courts, regulators, a company itself or the person's own admission, might an insurer be off the hook -- again, depending on how a policy is written.

11." Backdating's effect on insurers "is closer to a blip than it is to Hurricane Katrina," said AIG's Smith.

Just like people who total their car in an accident, individual companies caught up in the backdating probes may see their rates boosted or even be denied coverage altogether.

As with any scandal, backdating has triggered shareholder lawsuits, although so far they have been a trickle rather than a torrent.

About 20 class-action suits and 90 more limited suits have been filed.

"But we're a long way from making the determination of who that is." So far, more than 30 executives and board members have stepped down or been fired at affected companies.

But that's not enough to prove wrongdoing that would invalidate their insurance coverage, Smith said.

It's too early to say how D&O policies will handle the backdating scandal, said Mike Smith, president of the financial division of AIG Domestic Claims Inc. Policies vary considerably, but, in general, D&O insurance covers people, not companies.

That means that an insurer would not pay legal expenses for a company under investigation by the SEC or Justice Department but would pay them for any insured director or officer who becomes a legal target.

Instead, about 90 so-called derivative suits have been filed.