A wrongful act describes the types of behaviour an organisation and its management are covered for by insurance. It provides an insight into the allegations that may arise from managerial activities, and how a policy is structured to protect individuals. Importantly, it also highlights the risks that are not likely to be covered, and instead must be insured elsewhere.
In this article, we will explore the concept of a wrongful act within the context of the following coverages:
- Directors and officers liability insurance
- Employment practices liability insurance
- Management liability insurance
- D&O insurance for nonprofits
You may also find that similar concepts apply to a broad range of financial lines insurances, such as professional indemnity insurance, cyber insurance, and even crime insurance to a certain extent. Keep in mind, however, that each policy is strictly interpreted according to its own terms and conditions.
Contents
1 Wrongful act: A definition
2 What types of acts are considered wrongful?
3 The insured capacity of management
4 Allegations are wrongful too
5 The claim notification process
6 Wrongful act: An example
7 Conclusion
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