| Directors and Officers Insurance ? Is It Worth It? |
| A recent New South Wales Court of Appeal decision highlights that insurance is not always going to be available when you expect it. |
Some of the One-Tel directors unsuccessfully, thought that their Directors and Officers? liability insurance would pay defense costs.
The insurer successfully relied on an exclusion in the policy, which provided that the policy ?does not provide an indemnity against a claim against a Director for dishonesty or fraud?.. However, this exclusion shall only apply to the extent that the subject conduct has been established by a judgement?.. adverse to the Director?.
The court agreed that the first part of the exclusion was sufficient grounds to avoid the policy, irrespective of whether a court judgement occurred to support that. It seemed that the insurer could make that judgement.
Although the decision is one that is based on the particular contract, the message is that insurance liability policies, which provide for indemnity for liability for third party and defense costs, will not necessarily protect you. Is protection on a scale of culpability, fault or merit?
24th-November-2003 |
|