Michaelian v. State Compensation Insurance Fund

Opinion

THAXTER, J.

In this case we decide that the employer’s liability portion of a workers’ compensation insurance policy does not provide coverage when the insured employer is sued for sexual harassment and related tort causes stemming from the alleged harassment. We further decide that the insurer, under no policy obligation to indemnify or defend against a pending third party action, did not become liable for defense costs when it notified the insured it would provide a defense under a full reservation of rights and subsequently, after paying only a portion of the defense costs, withdrew.…