Zurich, Hiscox in battle over who defends Giorgio Armani employee over sexual misconduct claim

In an important insurance coverage dispute, the New York Appellate Court has ruled in favor of Zurich American Insurance Company (ZAI), determining that Hiscox Insurance Company was responsible for covering a lawsuit related to allegations of sexual misconduct against a former Giorgio Armani Corporation (GAC) employee. The ruling clarifies how insurers determine liability for related claims spanning multiple policy periods.

Background of the case

The case arose from three lawsuits filed against GAC over sexual misconduct allegations involving former employee Javier Herrera. The lawsuits included:

• Loreto-Hays v. Herrera (2018), alleging sexual assault by Herrera while the plaintiff worked in a GAC store.
• Oberloh v. Giorgio Armani Corp. (2018), which included allegations that GAC ignored reports of Herrera sexually harassing multiple employees.
• Christin v. Herrera (2019), which involved five plaintiffs alleging a pattern of sexual harassment and assault by Herrera spanning several years.

Hiscox Insurance covered GAC during the first two lawsuits but denied coverage for the Christin lawsuit, arguing that it was filed outside its policy period. ZAI, which insured GAC during the Christin lawsuit, sought a ruling that Hiscox remained liable under the policy’s Related Wrongful Acts clause.

Read more: Insights into the evolving harassment risks and regulations in the workplace

Key policy clauses at issue

The case centered on how the insurance policies defined related claims:

• Hiscox Policy – related wrongful acts clause:
  • Defined related acts as those "which arise from a common causal connection or cause the same or related damages."
  • Stipulated that "any claim subsequently made that relates to a previously reported claim shall be deemed made at the time of the original claim."
• ZAI Policy – interrelated wrongful acts clause:
  • Stated that all claims that share "a common nexus of facts, circumstances, or causally connected events" are considered a single claim.
  • Deemed all such claims to have been first made when the earliest related claim was filed, regardless of when the subsequent lawsuits arose.

Court’s ruling and rationale

The New York Appellate Court found that the Christin lawsuit was sufficiently related to the earlier lawsuits under both policies. The court highlighted that:

• Common Nexus of Facts: All three lawsuits stemmed from GAC’s alleged failure to act on repeated complaints about Herrera’s misconduct.
• Causal Relationship: GAC’s decision to transfer Herrera to another store instead of disciplining him allowed further harassment to occur, linking all three cases.
• Precedent in Insurance Law: The court referenced prior rulings, emphasizing that policies covering "related claims" should be interpreted broadly when common factual patterns exist.

As a result, the court reversed the lower court’s decision and held that Hiscox’s policy covered the Christin lawsuit, meaning Hiscox was liable for defense and indemnification costs instead of ZAI.

Read more: Lloyd's of London insurer sexual harassment whistleblower to sue employer

This ruling underscores the importance of Related Claims provisions in insurance policies and how they influence coverage across multiple policy periods. The decision clarifies that when insurers define claims broadly as "related," they may be required to cover subsequent lawsuits even if those lawsuits arise outside their active policy period.

For businesses and insurers alike, the ruling serves as a cautionary reminder to carefully evaluate policy wording and how coverage is structured for potential long-term liabilities.

Case name & court: Zurich American Insurance Company v. Giorgio Armani Corporation, et al., Supreme Court, New York County.