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Going Separate Ways

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

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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 and damages? Not necessarily, says attorney Richard Zevnik, an associate with Berger Kahn in Irvine, California.

Most policies contain a "severability" or "separation of insureds" clause, which means that if there are multiple defendants in a lawsuit, the 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.

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