A Maryland court has ruled that the insurer does not have to defend the operator of a rock-climbing gym in a lawsuit which alleged that it negligently failed to prevent two of its coaches from sexually assaulting a teenage climber.
The lawsuit alleged that the company knew that the coaches had a history of sexually inappropriate behaviour and failed to take steps to prevent the assaults. Because the claim alleged that the employer had knowledge of the predatory conduct before the assault, there was no accidental occurrence that could give rise to an obligation to indemnify the legal costs of the proceedings.
Insurance is there to protect unforeseen and fortuitous losses.
(The case isEarth Treks Inc. v Gemini Insurance Co, case number 1:16-cv-02520, in the US District Court for the District of Maryland)
First published by Financial Institutions Legal Snapshot.