When a former executive sued his company for defamation, the company turned to its umbrella liability insurance policy to cover the defense cost. But the insurer refused and a federal appeals court backed up the insurer.
Reason: The policy's use of the word "including." The court said three types of coverage situations (wrongful dismissal,or discrimination) following the word "including" were just examples of some, not all, types of employment-related practices not covered under the policy, and that defamation could be among them. (Moroni Feed Co. v. Mutual Service Casualty Insurance Co., No. 01-4008, 10th Cir., May 2002)
The lesson: One word makes a big difference. Scrutinize both general liability and employment practice liability insurance (EPLI) policies for vague or partial clauses explaining exclusions. Make sure you're getting the basics of standard EPLI coverage, the cost of defending and paying any settlements or awards in employment allegations that aren't included in your general liability coverage.
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