More businesses in New York and across the country are finding it necessary to protect themselves against the cost of lawsuits and settlements that arise from employees accused of sexual harassment and other wrongdoing. Many business owners have decided to carry employment practices liability insurance policies, which cover the cost of defending against such charges and paying any resulting damages. However, as with any insurance policy, the insurance company will recommend policyholders read it carefully for exclusions.
Just because a company carries EPLI policies does not mean every act in every circumstance is covered. An insurance company has the right to deny a claim that is excluded from the policy. One common reason why an insurer may reject a claim under an EPLI policy is because the victim claims the harassment or abuse took place before the policy was in place. This is an important exclusion since, in many cases, victims wait years to bring their cases to the public eye.
Other common exclusions in some EPLI policies are the conduct exclusions. These deny coverage for actions that are intentional or that cause physical injury to the victim. A victim may be able to claim mental or emotional harm. However, if an employer's policy has an intentional acts exclusion, it is important to note that sexual harassment often escalates to criminal acts.
If the victim says that the harassment took place outside of work when both the victim and the alleged harasser were not on the job, the insurance company may have every right to refuse to cover the claim. Nevertheless, an employer may dispute the denial of such a claim, and the insurer will have to defend against accusations of bad faith. Under these circumstances, having a skilled New York insurance defense attorney will be of great benefit.