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⚠️ '''Wrongful act''' is a broadly defined term found in many [[Definition:Liability insurance | liability]] and [[Definition:Management liability insurance | management liability]] policy forms that describes the triggering conduct giving rise to a covered [[Definition:Claim | claim]]. In a [[Definition:Directors and officers insurance (D&O) | directors and officers (D&O)]] policy, for instance, a wrongful act typically encompasses any actual or alleged error, misstatement, misleading statement, omission, neglect, or breach of duty committed by an insured person in their capacity as a director, officer, or equivalent. The precise scope of this definition varies by policy wording and is one of the most heavily negotiated elements of any management liability placement.

📄 Policy language matters enormously here because the breadth or narrowness of the wrongful act definition directly controls what conduct falls within the coverage grant. Some forms limit wrongful acts to actions taken in an official capacity, while others extend to acts performed on behalf of outside entities at the company's request. [[Definition:Endorsement | Endorsements]] can expand the definition to capture [[Definition:Employment practices liability insurance (EPLI) | employment practices]] wrongful acts — discrimination, harassment, wrongful termination — or narrow it by adding specific exclusions for fraud, personal profit, or criminal conduct, often subject to a [[Definition:Final adjudication | final adjudication]] condition.

🔎 For [[Definition:Insurance broker | brokers]] advising clients and [[Definition:Underwriter | underwriters]] pricing risk, scrutinizing the wrongful act definition is essential due diligence. A definition that is too restrictive may leave coverage gaps that only surface when a claim is filed, eroding the [[Definition:Policyholder | policyholder's]] trust and potentially generating [[Definition:Errors and omissions insurance (E&O) | E&O]] exposure for the placing broker. Conversely, an overly expansive definition can expose the carrier to unanticipated [[Definition:Loss | loss]] frequency. Balancing these tensions — through careful [[Definition:Policy wording | wording]] comparison, market benchmarking, and clear communication with the insured — is at the heart of effective management liability [[Definition:Underwriting | underwriting]] and placement.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Directors and officers insurance (D&O)]]
* [[Definition:Management liability insurance]]
* [[Definition:Employment practices liability insurance (EPLI)]]
* [[Definition:Coverage trigger]]
* [[Definition:Policy wording]]
* [[Definition:Exclusion]]
{{Div col end}}

Definition:Wrongful act - Revision history

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