to misrepresentation. The "severability clause" in the policy conditions may be intended to protect against this by preventing misconduct by one insured from affecting insurance for other insureds; however, in certain jurisdictions it may be ineffective. Criminal acts exclusion Intentional illegal acts or illegal profits are typically not covered under D&O insurance policies; coverage would only extend to "wrongful acts" as defined under the policy, which may include certain acts, omissions, misstatements while acting for the organization. Because of exclusions and as a matter of public policy, coverage is not provided for criminal fraud. Other exclusions Directors and former directors may sue the company, particularly given their inside knowledge and potentially large stake in the organization. However, most D&O policies contain an "insured versus insured" exclusion which may prevent any payment in these circumstances. It is intended to prevent collusion, where an insured company could sue a director and collect the insurance money. However, it is possible to "carve out" this exclusion so that it does not apply to certain cases, such derivative actions, receivership trustees, and whistleblower actions. Coverage may be "rescinded" (voided, essentially excluded) in some cases, especially if there is some mistake in the application as to the financial details. Non-rescindable coverage may be purchased in some cases which can prevent this lack of coverage. Also, claims that come about from an issue that was known before the insurance was bought are rejected. If you hide this information, it can make the policy void for non-disclosure. Motivation and controversy Directors and officers insurance is provided so that competent professionals can serve as supervisors of organizations without fear of personal financial loss. Directors are typically not managing the day-to-day operations of the organization and therefore cannot ensure that the organization will be successful; further, business is inherently risky. Thus, the business judgment rule has developed to shield directors in most instances. However, insuring negligence in supervising organizations, or wrongful acts and misrepresentation in financial statements is controversial due to its effect on accountability, otherwise known as the moral hazard problem. In the United States, corporate boards have a "duty of care", but if personal financial consequences for violating that duty of care are lacking, the boards may not perform proper due diligence. In the famous case of Smith v. Van Gorkom (1985), the Delaware Supreme Court found a board grossly negligent and therefore liable. The decision created a