In basic terms, an insured must disclose any matter they know to be relevant to the insurer’s decision to accept the risk. Continuous disclosure is also very important. If there is any material change to the company during the policy period, the insured needs to keep the insurer informed of the change.
Timing is extremely important on ML, especially when it comes to reporting claims as these policies are written on a Claims Made policy form. This means that in order to trigger a claim the demand/claim must be reported and indemnity granted during the period of insurance. So, if a policy is lapsed and a claim is reported after the policy period the claim will be denied.
It is crucial to understand your Directors & Officers policy and it’s specific exclusions. Insurer underwrite all public company Directors’ & Officers’ policies and they will add customised exclusions as they deem fit. It is important to understand what these exclusions mean and if there are any reporting requirements (ie. Capital raising threshold exclusion).
Territorial limits outline how a policy will respond for claims occurring worldwide. This can vary, but typically an ML policy will have worldwide cover, but excluding cover for actions brought up in a North American court.
In this example, if a claim occurs from a wrongful act committed in North America but is brought up in an Australian court under Australian law, the policy will respond. If the claim is brought up in a North American court, the policy will not respond. In this scenario you would be required to obtain a locally administered policy in the excluded country (USA & Canada in this example).
These are usually automatically excluded under Management Liability policy wordings and need to be added on as a case by case basis.