What Does Personal Profit Exclusion Mean?

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What does Personal Profit Exclusion mean? Read on to discover the definition & meaning of the term Personal Profit Exclusion - to help you better understand the language used in insurance policies.

Personal Profit Exclusion

Personal Profit Exclusion

An exclusion contained in nearly all directors and officers (D&O) and fiduciary liability insurance policy forms. The exclusion precludes coverage of claims against insureds who attain personal profit or financial advantage to which they were not legally entitled. For example, assume that an outside director sitting on a corporate board uses inside information to assist his own corporation in obtaining a contract with the company on whose board he sits. If a stockholder were to bring a claim against that director, a personal profit exclusion may preclude coverage for the claim. However, few policies apply the personal profit exclusion unless the claim of personal profit is factually established. From a practical standpoint, this means that coverage to defend against allegations of illegal personal profit applies, until it is proven that the insured did, in fact, obtain such profit. Accordingly, the policy always excludes actual damages that resulted from any illegal conduct.

We hope the you have a better understanding of the meaning of Personal Profit Exclusion.

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