Are Businesses Insured Against Sexual Harassment Claims And Lawsuits?

Believe it or not, businesses have the option to build insurance policies that protect against claims of sexual harassment. They go hand-in-hand with other more reasonable protections like wrongful termination, discrimination, whistleblowing, and harassment. Insurance policies that protect against sexual misconduct in the workplace, though, have come under fire. After all, employers who won’t be held financially responsible for the misconduct don’t have much of an incentive to prevent it from happening in the first place.

A lawyer for Castronovo explained: “Sexual harassment and assault insurance policies are more common than ever because of the #MeToo movement. This also happens to be the reason why they’re becoming more controversial. There are two questions. Should a business owner be held responsible for claims made against an employee if training is mandated? On the other hand, shouldn’t business owners who do nothing to prevent an atmosphere rife for harassment be held responsible? That’s why many people don’t believe business insurance should be made available to businesses.”

Protections against sexual harassment, assault, and misconduct are normally covered in employment practices liability (or EPL) insurance policies.

One important factor in these policies is that bodily injury is usually excluded from the policy. That means if an assault leads to injury, it won’t be protected by a claim. Sometimes partial coverage is available for these crimes.

An Insureon poll of small businesses operating in the United States found that nearly half did not buy into a policy protecting them from claims like the aforementioned. The poll also found that most of these businesses had never received a harassment complaint, three-quarters of the businesses have strict policies and rules meant to address the potential for sexual harassment, and just over half of the businesses provided training. But the most important takeaway is that nearly half of businesses — don’t provide such training. 

This is important, since 83 percent of those that purchased business insurance have a policy in place that would limit financial accountability in the event of a sexual harassment claim in the workplace.

This could lead people to natural conclusions about where society is headed. #MeToo changed the way we view sexual harassment in the workplace forever, and it stands to reason that society will continue to address concerns and attempt to reduce overall claims. New legislation could require all businesses, small and large, to purchase insurance — but that wouldn’t change the underlying reasons that harassment occurs.

More meaningful change would require businesses to provide training related to sexual harassment. Employees should see and hear about actual examples of claims that have occurred in the past, and know how to avoid making these mistakes themselves. Anyone can be guilty of sexual harassment for misplaced or inappropriate comments at work. They should be made aware of the consequences.

Speaking of consequences, new legislation at the state and federal level could address those as well. Fines could be imposed, jail sentences could be lengthened, and non-incarceration consequences could be levied against those found guilty of sexual harassment or assault in the workplace.