Litigation

Cal. Litig. 2018, Volume 31, Number 3

New Liberty From Liability Insurance Coverage Worries

By Michael G. Dawe & Brian D. Cronin

The California Supreme Court recently put to rest an important issue of insurance coverage that will impact all businesses and individuals who purchase general liability insurance to protect themselves from negligence-based liability claims.

In Liberty Surplus Insurance Corporation v. Ledesma & Meyer Construction Company (2018) 5 Cal.5th 216 ("Liberty"), the specific issue the court addressed does not at first glance sound like one that would be relevant to most people. The issue was whether an employer and its individual owners were potentially covered by their general liability insurance when sued for the negligent hiring, retention, and supervision of an employee accused of molesting a child while on a construction project at a school. However, the court’s opinion goes far beyond the limited reach of this factual scenario, and clarifies a major area of uncertainty that has affected all liability insurance policy holders.

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