Four Insurance Policies That May Protect against a Sexual Harassment Claim
Depending on the circumstances, there are four different types of insurance policies you need to consider:
Employment Practices Liability Insurance (EPLI): This is the most likely policy to respond to a sexual harassment claim. It covers your company against employees’ claims of sexual misconduct that occur in the course of their employment. Most policies explicitly say they cover sexual harassment, wrongful termination, discrimination and retaliation. The main limitation of an EPLI policy where sexual harassment is concerned is that it does not cover allegations of bodily injury.
General Liability (GL): Most GL policies cover “personal injury,” which is defined to include defamation. They will also cover claims for bodily injury (which EPLI excludes). Coverage might be limited by a common GL policy exclusion against claims that are “expected or intended.” However, many courts have ruled that this exclusion doesn’t apply when the claim involves negligent hiring or sexual assault. Another problem is the standard exclusion against claims made by employees, though some courts have ruled in favor of coverage when the misconduct was off premises or not related to employment.
Directors & Officers (D&O): D&O indemnifies the business for “wrongful acts” of a company’s directors and officers and commonly, by endorsement, of its employees. As with EPLI, bodily injury —including mental anguish, humiliation and emotional distress as well as “willful or intentional” misconduct — is excluded.
Crisis Management or Reputation Risk: These new coverages seek to address the bottom-line impact of negative publicity to a firm. They cover the cost of hiring a public relations firm. Coverage is triggered by an actual loss sustained that is directly attributable to negative publicity. These policies vary widely and may include specific language excluding claims by employees against the company.
For help deciding which policies may be helpful for in your firm, please contact us.
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