Do Employers Have Insurance For Sexual Harassment And Sexual Assault?

Thanks in part to the ever-present #MeToo movement, the number of public cases against high-profile defendants accused of sexual harassment or sexual assault has grown exponentially over the past few years. Perhaps this is why we have received so many inquiries from readers who want to know whether or not large companies and corporations can buy insurance to protect themselves from the unwanted sexual advancements of their employees.

The answer is yes.

This will leave a foul taste in some people’s mouths, but for anything that can affect a business’s profits there is an insurance clause to cover it. There are a few different types of insurance that covers claims for sexual harassment or assault, such as an employment practices liability insurance policy (EPLI). Another possible avenue of protection is basic liability policy for directors and officers (D&O).

Not every claim will result in compensation — because the facts matter. Allegations of harassment or assault must meet the definitions provided by the Equal Employment Opportunity Commission (EEOC). According to this definition, sexual harassment is indicative of “unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when this conduct explicitly or implicitly affects an individual’s employment, unreasonable interferes with an individual’s work performance, or creates an intimidating, hostile, or offensive work environment.”

We should make a few aspects of such a case clear based on this definition. First, the harassment or assault must be proved by factual evidence. Mere allegations are not enough. 

Vice President Marie-France Gelot of Lockton Northeast wrote, “Whether or not a claimant is able to actually make a case proving that sexual harassment occurred, the reality is that the bulk of liability faced by companies accused of such conduct is not generated after a jury trial. It is generated by attorneys’ fees in litigation, win or lose. In the current environment, this is a critical point; any perceived harassment can result in six-figure liability for a company, regardless of whether a judge or jury would ultimately find the harassment unlawful.”

That means that companies still pick up insurance simply based on the fact that a mere allegation can cost many hundreds of thousands of dollars — even if actual evidence of misconduct does not exist. This is in part due to the fact that any lawsuit will likely involve attorney’s fees for the other side, and a sexual abuse attorney can be pricey for a victim. 

Those seeking insurance — or those seeking damages for sexual harassment or assault — should remain keenly aware that the national conversation on this type of abuse is ongoing and that rapid-fire changes to laws in jurisdictions around the country and the world remain constant. That means that insurance adjusters are more likely than not to continue adjusting policies to reduce the possibility of collection from either side (because insurance only works properly if insurance companies cover aspects of everyday life that don’t often result in a good case). 

Gelot confirmed as much when she said, “It remains to be seen if EPLI insurers will react to the momentous changes occurring in the national conversation on sexual harassment in the workplace by limiting the scope of the coverage or making it more expensive.”