In the case of AIG Australia v Jaques 2014 VSCA 332, Australia’s Victorian Court of Appeal decided that a respondent was a non-executive (rather than an executive) director of an insured. The respondent was, therefore, entitled to extended cover under a policy (by way of a special excess or additional limit of AUS$1 million for each non-executive director).

The respondent:

  • Was a director of the insured.
  • Upon being appointed the general manager of a company owned and managed by the insured’s managing director, ceased to receive directors’ fees.
  • Tabled reports at the insured’s board meetings, apparently within the scope of this general manager role.
  • Was named as one of the insured’s executive directors in two of the insured’s product disclosure statements (although the respondent gave evidence that at least the first reference to him being an executive director was a mistake).
  • Was described in the insured’s directors’ meeting minutes as an executive director.

However, the Victorian Court of Appeal decided that the respondent was not one of the insured’s executive directors. This is because the respondent was, in fact, performing insufficient executive functions in the management and administration of the insured. Accordingly, the respondent was a non-executive director of the insured under the policy. The respondent was, therefore, entitled to extended cover (by way of the special excess limit) of an additional AUS$1 million.

This case demonstrates the importance of avoiding uncertainty as to which individuals are entitled to access additional cover.