Wilful misconduct clause

General exclusion 4.1 of the ICC clauses speaks about “ Loss damage or expense attributable to wilful misconduct of the assured” being an exclusion & rightly so. An assured should not benefit or get indemnified because of his own misconduct. This is one exclusion which cannot be bought back too.

Issues arise when the assured is a corporate body. Some insurers invoke this exclusion when any of the employees of the assured are involved in a misconduct leading to loss or damage to the cargo in transit. The reason for the misconduct could be disgruntlement, revenge, acting for a competitor and many many more. Are insurers right in invoking 4.1 under these circumstances? Answer is No. Assured in case of a corporate body would mean a director, officer or promoter who could bind the corporate or represent it or be its alter ego.

While this is the factual position, to make it abundantly clear it would be prudent to add the Wilful Misconduct clause to the policy. This clause says that exclusion 4.1 can be invoked only if the misconduct has been done with the privity of the director/ officer who is authorised to bind the company.