Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
EXCLUSIONS<br />
A. IMPROPER BENEFIT EXCLUSION<br />
The policy excludes coverage for Loss that is<br />
based upon or directly or indirectly arising out of or resulting from an Insured gaining in fact any personal<br />
profit or advantage to which the Insured is not legally entitled.<br />
The foregoing provision is typically referred to as the personal profit exclusion. A person is not legally entitled<br />
to an advantage or profit resulting from his violation of law. Courts have generally found, therefore, that loss<br />
under an insurance policy cannot be held to include restoration of an ill-gotten gain. Courts have reasoned<br />
that allowing an insured to receive coverage for such loss would encourage insureds to intentionally engage in<br />
unlawful activity with the purpose of reaping a benefit from such activity through insurance. Application of this<br />
exclusion requires not only that the individual director or officer personally benefitted from his actions, but that<br />
he was not entitled to the benefit he gained. (Exclusion A).<br />
B. CRIMINAL ACTS EXCLUSION<br />
The policy applies only to negligent acts or omissions. The policy therefore excludes coverage for Loss “that<br />
results in a judgment or final adjudication that any Insured has committed any criminal, dishonest, intentionally<br />
malicious, or fraudulent act, error or omission.” This exclusion is not commonly utilized as a bar to coverage<br />
because it requires a judgment or final adjudication to apply. (Exclusion B).<br />
C. PERSONAL INJURY AND PROPERTY DAMAGE EXCLUSION<br />
Coverage under the policy is limited to economic damages. The policy thus excludes coverage for Loss based on<br />
bodily injury, sickness, mental anguish, emotional distress, disease or death, or to loss of or damage to tangible<br />
property.(Exclusion C).<br />
The policy also excludes coverage for Loss or injury resulting from (1) false arrest, malicious prosecution, abuse<br />
of process, false detention or false imprisonment; (2) assault and battery; (3) libel, slander or defamation of<br />
character; (4) wrongful entry or eviction; or (5) invasion of any right of privacy. (Exclusion G).<br />
D. INSURED VERSUS INSURED EXCLUSION<br />
The policy excludes coverage for Claims brought by one insured against a co-insured, except where the Claim<br />
arises from failure to perform professional services for the claimant as a client. This exclusion originated to<br />
prevent collusion in support of claims tendered under D&O policies. Insurers sought to preclude coverage for<br />
collusive suits in which a corporation would sue its officers and directors in an effort to recoup business losses,<br />
thus converting the liability insurance policy into business-loss insurance. The policy is intended to protect against<br />
Claims by outsiders, not intracompany Claims. (Exclusion D).<br />
While the exclusion is more prevalent with regard to D&O insurance, it occasionally applies to Claims under the<br />
MCPL policy. In that context, application of the exclusion sometimes turns on whether professional services are<br />
being rendered to the claimant insured.<br />
PROFESSIONAL LIABILITY COVERAGE · 14