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The “director’s liability” or “guarantee of fines and/or civil penalties” insurance contract does not cover situations of intentional fault . This is a decision that should reassure many insurance companies. Indeed, the Court of Cassation rendered a judgment on June 14 in which it endorsed the refusal of an insurer to cover a claim, due to the intentional fault of the manager of the insured company.
Intentional misconduct and insurance coverage: a court decision: –
In this case, after having disseminated false or misleading information aimed at influencing the price of securities on a regulated market, a company was worried by the AMF. After investigation, the latter sentenced the company to pay a heavy fine for “failure to inform the public, by disseminating inaccurate information”. The case is also brought before the criminal court, which condemns the manager of the company to a fine for “dissemination of false or misleading information aimed at influencing the price of securities on a regulated market”.
The scope of insurance cover and willful misconduct: –
La société et son ancien dirigeant condamné ont alors introduit une réclamation auprès de l’assureur qui a refusé de fournir sa garantie.
However, the company argues that it has taken out an insurance policy entitled “directors’ liability”, guaranteeing the directors and corporate officers against the pecuniary consequences arising from their individual or joint civil liability and attributable to any actual or alleged professional misconduct. in the exercise of their function. It had even signed an endorsement to extend the guarantee to “fines and/or civil penalties imposed on policyholders by legislation or regulations following an investigation, instruction or investigation carried out by a court or an administrative authority”. For its part, the insurer criticizes the intentional fault of the manager and maintains that he had the will and the conscience to make his own insurer pay the consequences which would result from his faults. By committing, within the meaning of article L113-1 of the Insurance Code, of an intentional fault, incompatible with the risk, the guarantee of the insurer was not due. Both the Court of Appeal and the Court of Cassation have confirmed that the insurer does not have to guarantee the voluntary and deliberate failures of the insured to comply with laws, regulations and rules in general.
Les juges ont estimé qu’il ne s’agissait « ni d’une faute d’ inattention or negligence, nor an error of fact, but the conscious expression of a deliberate desire to provide the public with information likely to modify the apprehension of the financial situation of the company, to validate the operations that it illegal knew”.
When the insured commits, within the meaning of article L113-1 of the Insurance Code, an intentional fault, incompatible with the risk, the insurer’s guarantee is excluded.
