Consider, for example, an Insured Person who is an attorney. He is also a sole trader which manages the affairs of various trusts. Can the D&O policy be used to cover liability arising out of the mismanagement of these trusts?
- Probably not because this would fall under the professional services exclusion on the policy.
- There are two levels to this relationship
- The attorney manages the running of the business (albeit a sole trader)
- The business offers a service to clients
- In this case the Insured Company is the sole trader and the Insured Person is the attorney himself.
- The D&O policy would cover the attorney’s mismanagement of the sole trader e.g. failing to renew his legal practitioner’s trading licence on time.
- By contrast, a Professional Indemnity policy is intended to cover liability arising out of the professional services that the sole trader provides e.g. mismanaging the trusts.
Directors and Officers Liability