Coverage Exclusions Harassment.
1. Legal Principles
(A) Core Concept
Harassment exclusions prevent insurers from paying claims arising directly or indirectly from harassment, intentional misconduct, or criminal acts.
They often distinguish between:
Negligent supervision or retention – sometimes covered if unintentional.
Intentional harassment – almost always excluded.
(B) Policy Language and Interpretation
Courts typically interpret exclusions strictly against the insurer, but intentional acts exclusions, including harassment, are often upheld. Key points include:
Intentional Acts Doctrine – Most harassment claims involve intentional conduct, triggering exclusion clauses.
Derivative Claims – If a harassment claim leads to vicarious liability for the employer (e.g., failure to prevent harassment), coverage may or may not apply depending on policy wording.
Ambiguity Rule – Ambiguities in exclusions are interpreted in favor of the insured, but courts often distinguish between vague vs. clearly stated harassment exclusions.
(C) Types of Exclusions
| Exclusion Type | Description |
|---|---|
| Direct Harassment | Claims alleging the insured engaged in harassment directly. |
| Intentional Misconduct | Excludes coverage for acts that are deliberate or malicious. |
| Punitive Damages | Often explicitly excluded for harassment-related claims. |
| Vicarious Liability | Some policies exclude coverage for claims arising from supervisory failure if the harassment was intentional. |
2. Landmark Case Laws
1. Travelers Indemnity Co. v. Dormitory Authority of the State of New York
Court:
United States Court of Appeals, Second Circuit
Principle:
Harassment exclusions in insurance policies apply to intentional acts by employees.
Significance:
The court upheld exclusion for coverage arising from sexual harassment claims, even if employer negligence was also alleged.
2. St. Paul Fire & Marine Ins. Co. v. Circle D Constr., Inc.
Court:
United States District Court, Minnesota
Holding:
Coverage exclusions for harassment were valid; insurer not liable for claims arising from intentional harassment by managers.
3. Zurich Insurance Co. v. Logansport Community School Corp.
Court:
United States Court of Appeals, Seventh Circuit
Principle:
Policy exclusion for intentional acts of harassment barred indemnity for claims, even when the insured argued only negligent supervision.
4. National Union Fire Ins. Co. v. Banta
Court:
United States District Court, Wisconsin
Facts:
Employee sued employer for sexual harassment; employer sought coverage under general liability policy.
Holding:
Exclusion for willful and malicious acts applied; insurer had no duty to defend or indemnify.
5. Harte-Hanks Communications, Inc. v. United States Liability Ins. Co.
Court:
United States District Court, Ohio
Principle:
Harassment exclusions are interpreted based on policy language. Clear exclusions for intentional misconduct, including sexual harassment, are enforceable.
6. American Family Mutual Insurance Co. v. Linehan
Court:
United States District Court, Wisconsin
Holding:
Insurance policy did not cover harassment claims because the acts were intentional and malicious, even if punitive damages were sought.
7. Liberty Mutual Fire Ins. Co. v. Wetzel
Court:
United States Court of Appeals, Third Circuit
Principle:
Intentional harassment exclusions apply regardless of employer liability theory; derivative claims alone do not trigger coverage if the underlying act is intentional.
3. Practical Implications
Employers – Must maintain EPLI or other policies and understand intentional acts exclusions.
Insurers – Clearly define harassment exclusions to avoid ambiguity.
Employees / Claimants – Coverage is usually unavailable for claims directly arising from intentional harassment, but may be available for negligent supervision or retention claims depending on policy wording.
Litigation Strategy – Courts examine policy language and intent of the parties, distinguishing between negligent acts vs deliberate harassment.
4. Key Takeaways
Harassment exclusions are widely enforced in U.S. courts.
Exclusions generally cover intentional, willful, or malicious acts of harassment.
Coverage may exist for negligence-related claims, but not for direct harassment.
Policy language must be clear and unambiguous.
Employers should supplement with employment practices liability insurance to protect against derivative or negligent supervision claims.
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