Musk’s Maverick Lawsuit Shield Is Sign of Skyrocketing Rates

When Elon Musk said in April he was dropping the insurance policy that protects Tesla Inc.’s board from shareholder lawsuits, it got Skip McBride’s attention.

To McBride, who used to manage law firm Bracewell LLP’s malpractice exposure, Musk’s decision to insure Tesla’s directors out of his own pocket was a first—and a risky move.

But it was also the latest sign that companies are hunting for creative workarounds as rates for directors-and-officers insurance skyrocket amid a surge in lawsuits by plaintiffs seeking to sue as a group. That litigation is now driven by a rash of claims that companies bungled the response ...