California’s highest court has given the state’s employers peace of mind with its ruling on Monday, June 4, 2018, that an insurance carrier’s defense obligation can be triggered by claims that a company failed to properly vet or supervise a worker who then intentionally hurts someone.
The decision came as the California Supreme Court responded to a certified question from the Ninth Circuit in Ledesma & Meyer Construction Co. Inc.’s coverage dispute with Liberty Surplus Insurance Corp. The state high court found that claims that an employer is negligent in hiring, retaining or supervising a worker who intentionally injured a third party trigger a general liability policy’s coverage for an accident, or “occurrence.” Under state law, an accident is “an unexpected, unforeseen or undesigned happening or consequence from either a known or an unknown cause.”
Rutan & Tucker Partner Lisa Neal told Law360, “The opinion draws a strong distinction between the negligent conduct of the insured employer, which was an indirect cause of the injury, and the intentional conduct of the employee, which was the direct cause of the injury. This could result in a rush of claims by employers who have faced, or are facing, negligent hiring claims.”
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