Order of Payments (Management Liability)

The Order of Payments clause sets out how policy limits are shared out. This matters when several claims or claimants compete for limited cover. It usually puts individual directors and officers first, known as Side A claims, ahead of company reimbursement claims, known as Side B claims. This order protects the personal assets of directors and officers. It ensures their defence and payout needs are met before company claims use up the limits. If a company becomes insolvent during a case, this clause sends any remaining limits to individual insureds, not to creditors through the company. This protection matters in Australian insolvency cases, where liquidators might otherwise try to reach the policy funds. The clause gives directors comfort that company claims will not erode their own cover.

The Order of Payments clause sets out how policy limits are shared out. This matters when several claims or claimants compete for limited cover. It usually puts individual directors and officers first, known as Side A claims, ahead of company reimbursement claims, known as Side B claims. This order protects the personal assets of directors and officers. It ensures their defence and payout needs are met before company claims use up the limits. If a company becomes insolvent during a case, this clause sends any remaining limits to individual insureds, not to creditors through the company. This protection matters in Australian insolvency cases, where liquidators might otherwise try to reach the policy funds. The clause gives directors comfort that company claims will not erode their own cover.