Discrimination and CGL Policies
What Does General Liability Cover?
Commercial general liability (CGL) is a type of insurance policy that provides coverage to a business for bodily injury, personal injury, and property damage caused by the business’ operations, products, or injuries that occur as the result of the business operations. Commercial general liability is considered comprehensive business insurance, though it does not cover all risks a business may face.
These policies have different levels of coverage. A policy may include premises liability coverage, which protects the business from claims that occur on the business’ listed physical location. It may also include coverage for bodily injury and property damage that is the result of a finished product or service done.
What is Discrimination
Discrimination is the unfair or prejudicial treatment of people and groups based on characteristics. The most commonly discussed categories of discrimination are race, color, religion, sex (including pregnancy, sexual orientation, or gender identity), national origin, age (40 or older), disability and genetic information (including family medical history).
Why Is Discrimination Not Covered Under CGL?
Imagine you are looking to promote one of your employees to a managerial position. Suzie is young and newer to the team, but has a go-getter attitude and you believe she is the right fit. You announce Suzie has been chosen for the position and you believe strongly in your decision and the impact you feel it will have on the company as a whole.
Soon after announcing Suzie’s promotion, you get a lawsuit from another employee, Steve, claiming age discrimination. Steve has more education, more experience and has been with the company longer than Suzie. He is asking for $40,000 in compensation for the difference between his current pay and benefits, and those he would have received had he been promoted.
Using this example, even if your policy does not specifically exclude discrimination, there are two main reasons why your claim could be denied under your commercial general liability policy: it’s not a covered injury as intended by the policy form and it’s not accidental.
Not A Covered Injury
Steve’s lawsuit is asking for reparations because of damages for economic losses like back pay, loss of future earnings, and lost benefits. A commercial general liability policy normally covers claims including damages for bodily injury, property damage or personal and advertising injury. Steve’s lawsuit does not allege the company for a covered injury.
General liability policies cover injury or damage that results from an occurrence (accidental or sudden event) and discrimination doesn’t usually occur accidentally. Rather, discrimination results from intentional acts committed by employers.
Looking for more to read?
- What is Business Insurance?
- Uncovered Claims Average $40k-$60k for EPLI
- Changes for California Business Owners!
What Policies Cover Discrimination?
Usually, discrimination does not fall within the coverage terms of the commercial general liability policy and may even be specifically excluded. Employment practices liability insurance (EPLI) covers a variety of employment-related claims, normally including discrimination.
EPLI may provide protection against many kinds of employee lawsuits, including claims of:
- Sexual harassment
- Wrongful termination
- Breach of employment contract
- Negligent evaluation
- Failure to employ or promote
- Wrongful discipline
- Wrongful infliction of emotional distress
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“I have dealt with Stromsoe Ins for 13 years. They have been outstanding in customer service and finding me the best policies for my needs. I regret having to say good-bye as I say hello to retirement.”
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