- The Insolvency clause excludes claims arising out of the Insured’s Insolvency.
- The Estates and Legal Representatives clause (amongst other things) covers claims made against the legal representative of an insolvent Insured.
- Is there any benefit in covering the claims made against the legal representative of an insolvent Insured if policy contains the Insolvency clause?
- Yes, because the legal representative could be held liable for mismanagement claims which are unrelated to Insolvency.
- Example: the insolvent Insured’s legal practitioner failed to renew a trading licence on time. As a result the value of the Insured’s estate was further eroded and benefit payable to creditors was even smaller. The creditors sued the legal practitioner for that drop in benefit.
Directors and Officers Liability