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Court says liability insurer must cover employee defamation

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in Small Business Tax,Small Business Tax Deduction Strategies

Good news for employers carrying various types of liability coverage: A Texas Court of Appeals has sided with an employer that attempted to collect on a liability policy after it lost a $1.75 million defamation judgment.

The employer, Greenspoint Dodge of Houston, carried employment practices liability coverage through DaimlerChrysler Insurance Co. The insurer claimed a defamation case an employee brought against the car dealer was outside its coverage and refused to pay.

Greenspoint Dodge filed suit, claiming the policy did not clearly exclude coverage for defamation cases. The court agreed. DaimlerChrysler must either appeal or pony up its part of the settlement.

Advice: Always have your attorney review your employment practices liability insurance policy to make sure it meets your needs and provides adequate coverage.

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