Side A Directors' & Officers' Liability

About This Policy

It covers the personal liability of directors and officers for losses that their company cannot or will not indemnify — and it responds when the company's primary D&O or management liability insurance is insufficient, unavailable, or does not cover the loss.

This is sometimes called "Side A" cover because it protects only the individuals, not the company. It is also a "Difference in Conditions" (DIC) policy because it can respond even when the underlying policy does not — filling gaps that arise from insolvency, coverage disputes, or narrower terms in the primary policy. DIC drop-down cover is a core, unconditional feature of this policy — see Section 2.3.

Who this policy is for: Directors and officers of companies that face significant personal exposure — particularly where the company may be unable to indemnify them (for example, due to insolvency, statutory prohibition, or constitutional restriction).

This policy, together with your schedule and any endorsements, forms your contract of insurance with us. Words shown in bold have special meanings — you will find their definitions in Section 1.

Before this policy was entered into, you were given written notice, as required by s 40(1) of the Insurance Contracts Act 1984 (Cth), of the effect of s 40(3) (see Section 6.2 of this policy).

Schedule

(Completed separately for each policy — contains your specific details)

• The company and its directors and officers

• The policy period

• The retroactive date

• The underlying D&O insurance (primary policy details)

• The attachment point (normally the limit of the underlying D&O insurance)

• The DIC self-insured retention (if any — may be nil for ground-up cover)

• Any specified or broadened DIC triggers (see Endorsement E07)

• The limit of liability of this policy

• Governing law and jurisdiction (the Australian state or territory)

• The premium

• Any endorsements

1. Definitions

2. What Is Covered

2.1 Excess Cover — Non-Indemnifiable Loss

If a claim is first made against an insured person during the policy period for a wrongful act committed on or after the retroactive date, and the claim results in a non-indemnifiable loss that exceeds the attachment point, we will pay the insured person's loss in excess of the attachment point, up to the limit of liability of this policy.

2.2 Excess Cover — Exhaustion of Underlying

If the underlying D&O insurance is exhausted by payments (whether for indemnifiable or non-indemnifiable losses), and a further claim is made against an insured person for a wrongful act committed on or after the retroactive date that results in a non-indemnifiable loss, this policy will respond to the insured person's personal loss above the exhausted underlying limit.

2.3 Difference in Conditions (DIC) — Drop Down

DIC drop-down cover under this Section 2.3 is a core, unconditional feature of this policy. It applies automatically to every insured person and is not contingent on any election, toggle, or activation in the schedule. The schedule may specify additional or broadened DIC triggers under Endorsement E07; those additional triggers apply in addition to, and do not narrow or condition, the triggers set out below.

This policy will drop down and respond from the DIC self-insured retention shown in the schedule (which may be nil, i.e. ground-up cover) to cover an insured person's non-indemnifiable loss arising from a wrongful act committed on or after the retroactive date, if the underlying D&O insurance fails to respond for any of the following reasons:

2.3.1 Insolvency of the Company

The company is insolvent, in liquidation, administration, receivership, voluntary administration, or a deed of company arrangement, and is unable to fund the insured person's defence or indemnify the insured person's liability. This is the core purpose of Side A DIC cover. When the company fails, the directors and officers are often the targets of claims by liquidators, creditors, and regulators — precisely when they are most exposed and least able to fund their own defence.

2.3.2 Insolvency of the Underlying Insurer

The insurer that issued the underlying D&O insurance is or becomes insolvent, is placed into liquidation, or is otherwise unable to pay.

2.3.3 Aggregate Exhaustion of Underlying

The aggregate limit of the underlying D&O insurance has been exhausted by prior claims during the same policy period.

2.3.4 Coverage Denial by Underlying Insurer

The insurer that issued the underlying D&O insurance denies or rescinds cover for the claim under the underlying D&O insurance, and the denial or rescission is based on: (a) a breach of the duty of disclosure or a misrepresentation in the application for the underlying D&O insurance — but only where the breach or misrepresentation was made without the knowledge of the insured person seeking cover under this policy; (b) a failure by the company (not the insured person) to comply with a condition of the underlying D&O insurance; (c) an exclusion in the underlying D&O insurance that does not appear in this policy; or (d) a severability or imputation provision in the underlying D&O insurance that attributes the knowledge or conduct of one insured person to another innocent insured person.

2.3.5 Cancellation of Underlying

The underlying D&O insurance is cancelled or not renewed (other than by the company for non-payment of premium), and the company has been unable to obtain replacement cover on substantially similar terms.

2.4 What DIC Does Not Cover

DIC drop-down does not apply if:

(a) the underlying D&O insurance denies the claim because it falls within an exclusion that also appears in this policy (for example, dishonesty established by final adjudication);

(b) the insured person seeking cover under this policy personally participated in the conduct that caused the denial of cover under the underlying D&O insurance; or

(c) the company has voluntarily cancelled the underlying D&O insurance and the insured person knew of the cancellation but did not notify us.

2.5 Priority and Independence

This policy is for the exclusive benefit of individual insured persons. The company has no right to claim under this policy and cannot direct, control, or assign the benefits of this policy.

If the company is in liquidation, administration, or receivership: (a) no liquidator, administrator, receiver, or creditor of the company has any right to access, assign, or claim the proceeds of this policy; (b) no court order or statutory charge against the company's assets affects the proceeds of this policy, because the proceeds belong to the insured person, not the company; and (c) we will pay the insured person directly — not through the company.

2.6 Presumptive Indemnification

For the purpose of determining whether a loss is a non-indemnifiable loss, it is presumed, unless we prove otherwise, that the company is legally permitted and financially able to indemnify the insured person for the loss. This presumption may be rebutted only by evidence establishing that the company is not legally permitted, or is not financially able, to indemnify the loss (for example, evidence of insolvency, liquidation, administration, receivership, or a deed of company arrangement).

Uncertainty as to whether the company is legally permitted or financially able to indemnify does not, by itself, entitle us to withhold or delay advancement of defence costs or payment of loss under this policy.

3. Extensions of Cover

3.1 Advancement of Defence Costs

We will advance defence costs to an insured person immediately upon request, without waiting for the underlying D&O insurance to respond or be exhausted, and without waiting for any determination of whether the loss is a non-indemnifiable loss.

If it is later determined that the loss falls within the underlying D&O insurance and should have been paid by the underlying insurer, the insured person must repay the advanced defence costs to us — but only if and when the underlying insurer actually pays.

If the company later indemnifies the insured person for the same loss (including, for example, from funds recovered in an insolvency, liquidation, administration, receivership, or deed of company arrangement), the insured person must repay to us the defence costs or other amounts we have paid under this policy for that loss, to the extent of the indemnification received, so that there is no double recovery.

3.2 Retired Directors and Officers

If an insured person ceases to hold office during or before the policy period (for any reason other than disqualification by a court), this policy continues to cover claims first made against them for 72 months after the end of the policy period, at no additional premium.

Unlimited, non-cancellable lifetime run-off for genuinely retired directors and officers is available under Endorsement E06, on payment of the additional premium shown in the schedule for that endorsement.

3.3 New Directors and Officers

Any person who becomes an insured person during the policy period is automatically covered from the date they take office.

3.4 Regulatory Investigation Costs

We will pay an insured person's defence costs in responding to a formal investigation or examination by a Regulator — even before a claim has been made.

3.5 Extradition Defence Costs

If an insured person faces extradition proceedings in connection with a wrongful act, we will pay their defence costs in resisting extradition.

3.6 Bail and Civil Bond Costs

If an insured person is required to post bail or a civil bond in connection with a claim covered by this policy, we will advance the cost of the bail or bond. The insured person must repay this amount if the bail or bond is refunded.

3.7 Preservation of Assets Costs

If a court order freezes or restrains the personal assets of an insured person in connection with a claim covered by this policy, we will pay the insured person's legal costs in seeking to vary or discharge the order, and will advance reasonable living expenses during the period the assets are frozen.

3.8 Public Relations

Following a claim covered by this policy, we will pay the reasonable costs of a public relations consultant to protect or restore an insured person's personal reputation.

3.9 Tax Advisory Costs

If an insured person incurs a personal tax liability as a direct result of a payment under this policy, we will pay the reasonable costs of tax advice in connection with that liability.

4. What Is Not Covered

We do not cover any claim or loss:

4.1 Indemnifiable Loss

that the company has actually indemnified, or is obligated to and financially able to indemnify, under any deed of indemnity, the company's constitution, or applicable law.

This policy covers what the company cannot or will not pay. It does not cover what the company has already paid.

4.2 Dishonesty and Fraud

arising from any deliberately dishonest, fraudulent, or criminal conduct of the insured person — but only after final adjudication establishes that the insured person personally committed the dishonest or fraudulent conduct. Until final adjudication, we will continue to advance defence costs. If final adjudication establishes dishonesty, the insured person must repay any defence costs we have advanced for the portion of the claim relating to the established dishonesty.

4.3 Personal Profit

for any personal profit, remuneration, or advantage gained by the insured person to which they were not legally entitled — but only after final adjudication establishes that the profit was improperly gained. Until final adjudication, we will continue to advance defence costs, on the same basis as Section 4.2.

4.4 Insured Versus Insured

brought by one insured person against another insured person, or by the company against an insured person — except for: (a) a claim brought by a liquidator, administrator, receiver, or equivalent officer; (b) a claim brought by a whistleblower; (c) a claim brought by the company that is funded or directed by an independent third party; and (d) a cross-claim or contribution claim arising from a claim first brought by an independent third party.

4.5 Prior Known Matters

arising from any wrongful act, fact, matter, or circumstance that the specific insured person seeking cover knew about before the start of this policy period and that they knew, or ought reasonably to have known, might lead to a claim. Knowledge is assessed individually for each insured person.

4.6 Prior and Pending Litigation

arising from, or in any way involving, any demand, suit, proceeding, investigation, or claim that was pending, or of which written notice had been given under any prior policy, before the retroactive date — regardless of whether the insured person seeking cover had knowledge of it.

This exclusion is objective. It applies whether or not the insured person seeking cover knew of the demand, suit, proceeding, investigation, or claim, and is distinct from, and additional to, Section 4.5 (Prior Known Matters), which turns on the insured person's individual knowledge.

4.7 Bodily Injury and Property Damage

for death, bodily injury, or physical damage to tangible property — except defence costs in WHS or safety proceedings arising from a wrongful act in the insured person's capacity as a director or officer.

4.8 Professional Services

for errors or omissions in professional advice or services provided to a third-party client. This is a PI exposure.

4.9 Major Transactions

arising from an initial public offering, listing on a securities exchange, or any transaction that results in the company becoming a publicly listed entity.

4.10 War, Terrorism, and Nuclear

arising from war, terrorism, or nuclear risks.

4.11 Sanctions

We will not provide any cover, or make any payment, to the extent that doing so would expose us to enforcement action under:

(a) the Autonomous Sanctions Act 2011 (Cth) or the Charter of the United Nations Act 1945 (Cth), or any sanctions, regulations, or designated-persons listings made under either Act; or

(b) any United Nations Security Council resolution binding on Australia.

4.12 US / Canada Jurisdiction

for any claim brought or maintained in a court in the United States or Canada — unless the US/Canada endorsement is purchased.

5. How Much We Will Pay

5.1 Limit of Liability

The most we will pay for all claims and defence costs combined during the policy period is the limit of liability shown in the schedule.

5.2 Defence Costs

Defence costs are included within the limit of liability, unless the schedule states that defence costs are payable in addition to the limit.

5.3 No Excess for Insured Persons

There is no excess payable by any insured person under this policy. We will never require a director or officer to pay out of their own pocket before we respond.

5.4 No Contribution from the Company

The company is not required to contribute to any loss under this policy. This policy is not dependent on the company's willingness or ability to co-fund a claim.

5.5 Order of Payment — Priority

If the limit of liability is or may be insufficient to cover all insured persons' losses, we will allocate payments: (a) first, to non-executive directors and independent directors; (b) second, to executive directors and officers; in each case prioritising defence costs before compensatory payments.

5.6 Excess of Other DIC Insurance

If any other DIC, Side-A, or similar difference-in-conditions insurance is available to respond to the same non-indemnifiable loss (whether arranged by the company, a co-insured, or otherwise, and whether or not identified in the schedule), this policy applies only in excess of that other insurance and will pay only after the limit of that other insurance has been exhausted by payment of losses.

Where more than one DIC policy is expressed to apply excess of the other (a circularity), each such policy will contribute on a pro-rata basis in proportion to its limit of liability, unless the schedule states a different order of priority for named layers.

5.7 Non-Avoidance

We will not avoid this policy, or any insured person's cover under it, under s 28 of the Insurance Contracts Act 1984 (Cth) or otherwise, for non-disclosure or misrepresentation in connection with the application for this policy — except where the specific insured person seeking cover personally committed the non-disclosure or misrepresentation, and did so fraudulently or with the intention to deceive us. Avoidance, where available, is limited to the cover of that insured person only, and does not affect the cover of any other, innocent insured person.

Where a non-disclosure or misrepresentation is not fraudulent, we will not reduce our liability to an innocent insured person under s 28(3) of the Insurance Contracts Act 1984 (Cth) or otherwise, on account of that non-disclosure or misrepresentation. We expressly waive that remedy as against every innocent insured person. This paragraph does not limit our rights under s 28 against the insured person who personally made the fraudulent non-disclosure or misrepresentation.

An innocent director or officer cannot lose their cover, or have it reduced, because of someone else's non-disclosure or misrepresentation in the insurance application.

6. Your Obligations

6.1 Notify Us of Claims

Any insured person may notify us directly of a claim. They do not need to go through the company or the company's broker. Tell us in writing as soon as reasonably practicable after you become aware of a claim.

6.2 Notify Us of Circumstances

Tell us during the policy period if you become aware of any fact, matter, or circumstance that might reasonably be expected to give rise to a claim. Notified circumstances will be treated as a claim first made during this policy period, in accordance with s 40(3) of the Insurance Contracts Act 1984 (Cth).

6.3 Do Not Admit Liability

Do not admit liability or settle without our written consent. We will not unreasonably withhold consent.

6.4 Cooperate

Cooperate with us and provide all information and documents we reasonably need.

6.5 Underlying Insurance

You must take reasonable steps to maintain the underlying D&O insurance on substantially similar terms and limits. If it is not renewed, is cancelled, or its limits or terms are materially reduced, tell us promptly.

A failure to comply with this Section 6.5 does not, of itself, reduce or exclude cover under this policy except to the extent we are prejudiced by that failure (see Section 7.8). It also does not, of itself, trigger DIC drop-down cover under Section 2.3 — drop-down is only available where one of the events described in Sections 2.3.1 to 2.3.5 actually occurs, including cancellation of the underlying D&O insurance under Section 2.3.5.

7. General Conditions

7.1 Duty of Disclosure

Each insured person has an individual duty of disclosure. We assess each person's disclosure separately. A failure by one person does not affect another person's cover (see Section 5.7 — Non-Avoidance).

7.2 Severability

This policy treats each insured person as if they have their own separate policy. The conduct, knowledge, or statements of one insured person are not attributed to any other insured person.

7.3 Cancellation

By you (the company): The company may cancel this policy at any time by written notice to us. Cancellation does not affect the cover of any insured person who has already notified a claim or circumstance, and does not affect the accrued rights of any insured person under this policy up to the date of cancellation.

By us: We may only cancel this policy on grounds permitted by the Insurance Contracts Act 1984 (Cth) s.60. Where we are entitled to cancel, we will give each insured person written notice individually as required by s.59. We will refund the premium proportionally.

By an insured person: An individual insured person cannot cancel this policy, and the company cannot cancel it in a way that removes cover for any individual without their written consent.

7.4 Discovery Period

If this policy is not renewed, each insured person has an automatic discovery period of 180 days (6 months) to notify claims arising from wrongful acts during or before the policy period. An extended discovery period of up to 72 months is available for an additional premium, requested within 60 days of expiry.

7.5 Governing Law and Jurisdiction

This policy is governed by the law of the state or territory of Australia shown in the schedule. The parties submit to the non-exclusive jurisdiction of the courts of that state or territory, and of any court of appeal from those courts.

7.6 Disputes and Complaints

Any insured person may raise a complaint directly with us or with AFCA: www.afca.org.au | 1800 931 678.

7.7 Privacy

We handle personal information in accordance with the Privacy Act 1988 (Cth).

7.8 Insurance Contracts Act — Savings and No Contracting-Out

Nothing in this policy excludes, restricts, or modifies, or purports to exclude, restrict, or modify, the operation of the Insurance Contracts Act 1984 (Cth). Where any provision of this policy is inconsistent with that Act, the Act prevails to the extent of the inconsistency.

Without limiting the foregoing, we may not refuse to pay a claim, in whole or in part, by reason of an act or omission of an insured person or the company after this policy was entered into, except to the extent permitted by s 54 of the Insurance Contracts Act 1984 (Cth) — that is, only to the extent that the act or omission has actually prejudiced us, and then only to the extent of that prejudice.

7.9 GST

Amounts payable under this policy are calculated without regard to any input tax credit to which the company or an insured person is or would be entitled under A New Tax System (Goods and Services Tax) Act 1999 (Cth), unless the schedule states otherwise. Where a payment under this policy is subject to GST, we will gross up that payment so that the recipient is placed in the same after-tax position as if no GST applied, to the extent the recipient is not entitled to an input tax credit for the corresponding acquisition.

Endorsement Library

Meridian Commons — Open Source Insurance Wording · CC BY 4.0 applies to the wording text only; the Meridian name, bearing mark, and Cuttleflow brand assets are excluded from the licence. Doc ref 2026/SADO/0001 · v1.2.0-DRAFT · July 2026. This version supersedes v1.0.0 (April 2026, superseded).

Designed for the Australian market. Assumes application of the Insurance Contracts Act 1984 (Cth). Adopters must obtain their own legal advice and their capacity provider's approval before use. This document is DRAFT — SUBJECT TO LEGAL REVIEW — NOT FOR USE until Wording Partner sign-off; the Wording Partner's review letter runs to Cuttleflow Pty Ltd t/a Cuttleflow Systems only. Users are responsible for their own legal review, regulatory compliance, and reinsurance alignment.