Full access to Entrepreneur for $5
Subscribe

Going Separate Ways

In a lawsuit, you and an employee could be sent down different paths.

By
This story appears in the August 2004 issue of Entrepreneur. Subscribe »

Consider this scenario: One of your employees assaults a customer, and that customer sues the employee, the company and you. But your liability coverage excludes intentional bad acts. Does this mean you are on the hook for legal fees and damages? Not necessarily, says attorney Richard Zevnik, an associate with Berger Kahn in Irvine, California.

Most business policies contain a "severability" or "separation of insureds" clause, which means that if there are multiple defendants in a lawsuit, the insurance company could deny or limit coverage on one and not on others. So you and the company could be covered for vicarious liability, but the employee who committed the assault may be denied coverage.

Continue reading this article -- and everything on Entrepreneur!

Become a member to get unlimited access and support the voices you want to hear more from. Get full access to Entrepreneur for just $5!