In judgment STL3165-2026, the Labor Chamber of the Supreme Court of Justice (the “Court”) resolved an appeal filed in the context of a constitutional action (acción de tutela) brought by a real estate company engaged in the administration of third-party lease agreements, which had procured a directors and officers liability (D&O) insurance policy.

The dispute arose from an operational error in the payment disbursement process, consisting of the generation and approval of a single transfer order to a third party, instead of multiple payments to the managed clients. As a result, more than COP 585 million were transferred to an unrelated third party, a situation identified following client complaints regarding the non-payment of lease proceeds.

Considering the foregoing, the company submitted a claim under the D&O policy. The insurer denied coverage, arguing, among other grounds, lack of coverage, failure to comply with the contractual requirements for the occurrence of a covered loss, and the potential characterization of the events as employee dishonesty or fraud, rather than a liability event covered under the policy.

The Financial Superintendence of Colombia, acting in its judicial capacity, declared a breach of the insurance contract and ordered payment of the indemnity, together with statutory default interest.

However, on appeal, such decision was reversed on the grounds that the requirements for coverage under the policy had not been satisfied with the absence of a claim as defined under the policy terms.

In response, the company filed a constitutional writ action alleging a violation of its fundamental rights. The claims were denied at first instance, and upon appeal, the Court upheld such decision, reiterating the following principles:

1. Legal nature of the insurance
   Relying on the findings of the appellate court, the Court reiterated that D&O insurance is liability insurance according to Article 1127 of the Colombian Commercial Code. In this regard, the Court stated:

   “(…) there was no doubt that the policy at issue was a liability insurance policy under which, pursuant to Article 1127 of the Commercial Code, the insurer is obligated to indemnify the pecuniary damages caused by the insured as a result of liability incurred in accordance with the law, the purpose of which is to compensate the victim, without prejudice to any benefits payable to the insured (…)”.

2. Proof of loss and conditions for payment of the indemnification
   The Court concluded that the occurrence of a covered loss under the terms of the insurance contract was not established, as there was no evidence of a third-party claim against an insured person (i.e., the employee who approved the payments), which is a prerequisite for triggering coverage under a D&O policy.

   “(…) the court emphasized that the evidence submitted by the claimant did not meet the requirements of the policy, insofar as there were no written claims from clients against the insured officer, a condition necessary to trigger coverage; the claimant positioned itself as the victim of a financial loss rather than as a party civilly liable to third parties, thereby assuming the role of a beneficiary.”

3. Distinction between internal corporate acts and third-party claims
   The Court distinguished between the company’s internal actions and the formal third-party claims required under the policy as a prerequisite to coverage. In this regard, it clarified those unilateral actions (including the internal investigations and demands directed to the insured person) do not constitute a “claim” within the meaning of the insurance contract and, therefore, are not sufficient to establish the occurrence of a covered loss or the amount of the loss.

   “(…) the documents and memoranda submitted were internal corporate acts with no evidentiary value as claims under the terms of the policy (…)”

   (…)
   
   “(…) at the extraordinary shareholders’ meeting held on December 2, 2022, the shareholders asserted claims against (…)—Director of Accounting Services—for the damages arising from the erroneous disbursement of funds and instructed the legal representative to submit a formal claim, which was reiterated in subsequent memoranda without acknowledgment of receipt.”
    
4. Absence of a claim against the insured employee
   The Court upheld the appellate court’s conclusion that the company failed to establish the elements of civil liability required under the insurance, as it did not initiate any judicial, arbitral, or other formal claim against the insured person. Accordingly, the conditions necessary to trigger indemnification were not met.
   
   “(…)the claimant company did not prove the civil liability required under the insurance, and limited itself to making unilateral accusations without acknowledgment of receipt, while the Director of Accounting Services denied any liability and pointed to the involvement of other employees; moreover, the legal representative acknowledged that any claims were directed to the bank, a third party, and the insurer, but never against her.”