At the root of the dispute lies the tension inherent in the policy. On the one hand, the policy explicitly covers damages arising from claims of sexual harassment, unwanted sexual advances, requests for sexual favors, or other misconduct of a sexual nature. On the other hand, the sexual misconduct exclusion takes away coverage for any claim arising out of, based on, attributable to, or in any way related to actual or alleged sexual harassment or sexual exploitation. The third provision, Endorsement 12, states that Allied has a duty to defend any claim covered in whole or in part under the policy – even if the claim is unfounded, false or fraudulent.
Ninth Circuit criticizes Allied World for refusing to defend harassment claims & more related News Here
