A year ago, if anyone asked you if you had heard about Harvey Weinstein and Kevin Spacey, you would assume they were working on a film together. Or, if you were asked your thoughts on casino mogul Steve Wynn, you would think the question was in reference to his next big project in Las Vegas, Macau or elsewhere.
However, in a very short period of time Weinstein, Spacey and Wynn have become three of the bigger names mentioned as part of the #MeToo conversation sweeping the country. Sexual harassment allegations (true or not) can cause significant financial and reputational damage to an individual and/or an organization. And if you think your organization is immune, it’s not.
Companies dealing with their own #MeToo situations often look to their insurance policies to cover potential liabilities that may arise from those situations. This article provides a brief overview of some of the relevant coverages under different types of policies in the event of a sexual harassment allegation. For a more in-depth overview of these coverages as well as strategies that companies can employ in order to avoid triggering their insurance coverage in the first place, download the full report here.
Commercial General Liability Coverage – CGL coverage applies to third-party liabilities arising out of “bodily injury” and “personal and advertising injury.” In some cases, this may apply to emotional injuries of the alleged victim but more than likely is barred by the “Employer’s Liability” exclusion.
Employment Practices Liability Coverage – EPLI coverage addresses for damages/“losses” arising out of “wrongful acts”/”wrongful employment acts” against the insured’s “employees” and others, including applicants for employment.
Directors & Officers Coverage – D&O policies may provide coverage for a “loss” if any insured becomes obligated to pay for a number of provisions within the policy such as a failure of the board to ensure company policies are adequately enforced.
Each insurance policy has a number of coverage options, exclusions and terms that may come in to play during a sexual harassment allegation. Understanding and leveraging you insurance coverages may help to mitigate the financial and reputational damages after an allegation is made— but the most effective measure to preserve your company’s reputation and bottom-line is to implement strategies and procedures to prevent harassment across your organization.
For an in-depth overview of some of the issues presented when investigating coverage under different types of policies as well as strategies that companies can employ in order to avoid triggering their insurance coverage in the first place, read the full report here.
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This article was joint authored with Aaron F. Mandel, Counsel within the Legal, Regulatory and Compliance Department of QBE North America.