Wrongful act

A wrongful act is the policy definition that triggers directors and officers (D&O) and errors and omissions (E&O) policies. It covers any error, omission or breach of duty, actual or alleged, by an insured acting in that capacity. The standard wording fits in one sentence: "any actual or alleged error, misstatement, misleading statement, act, omission, neglect or breach of duty committed or attempted by an Insured Person in their capacity as such". French policies render it as faute réelle ou alléguée, error, omission, inaccurate statement, negligence, breach of a legal, regulatory or statutory duty. The key word is "alleged". The policy responds as soon as a claim asserts the act, whether or not it happened, and that is what funds the defense against a groundless demand. Without it, the insurer could wait for the fault to be proven before paying a lawyer. The second key is capacity: the act must be committed as a director or officer, or, in E&O, in performing the declared professional services. A board member sued over how he ran another company is covered only by outside directorship cover. In E&O, the definition attaches to the services described in the schedule, and an activity missing from the application falls outside. The wrongful act ties in with the claims-made basis: it is the claim that must fall within the period, while the act may predate it, back to the retroactive date. Acts linked by the same fact, cause or series are grouped into a single claim, under a single limit, by the related claims clause.