Severability & Non-Imputation (Management Liability)

Severability provisions treat each insured person's cover as a separate contract. This stops one person's knowledge, statements, or misconduct from being attributed to other insured people. Without severability, if one director hid material facts on the application, the whole policy could be voided for every director. With severability, that person's misrepresentation only affects their own cover. Innocent directors keep full protection. Non-imputation extends this idea. It stops one insured person's knowledge being imputed to others when working out whether cover applies. This matters in several cases. One is where colleagues committed fraud that other directors did not know about. Another is where one director failed to disclose a personal regulatory issue. A third is where some executives knew of problems but hid them from the board. One common exception applies to Side B. The knowledge of senior executives may still be imputed to the company when it seeks reimbursement. This stops the company claiming ignorance of matters known to its own leaders.

Severability provisions treat each insured person's cover as a separate contract. This stops one person's knowledge, statements, or misconduct from being attributed to other insured people. Without severability, if one director hid material facts on the application, the whole policy could be voided for every director. With severability, that person's misrepresentation only affects their own cover. Innocent directors keep full protection. Non-imputation extends this idea. It stops one insured person's knowledge being imputed to others when working out whether cover applies. This matters in several cases. One is where colleagues committed fraud that other directors did not know about. Another is where one director failed to disclose a personal regulatory issue. A third is where some executives knew of problems but hid them from the board. One common exception applies to Side B. The knowledge of senior executives may still be imputed to the company when it seeks reimbursement. This stops the company claiming ignorance of matters known to its own leaders.