Chapter 16, H. Severability Clause

• Jurisdiction: United States

H. Severability Clause

The severability clause is designed to prevent the fraud or misrepresentation of one director or officer from being attributable to other innocent insureds. Typically, a severability clause provides that any statement made in an application, or the knowledge or information possessed by one insured, will not be imputed to any other insured for purposes of determining coverage. The rights of each insured are determined separately, and the representations or knowledge of one insured are not imputed to other insureds.⁴¹⁸

Other policies contain language that makes it clear that a misrepresentation in an application by one director or officer will void the entire policy. One policy contained language stating that "this Policy in its entirety shall be void and of no effect whatsoever if such misrepresentation were known to be untrue on the inception date of the Policy by one or more of the individuals who signed the Application." The language "one or more" indicates that the number of insureds affected by a knowing misrepresentation of...