In State Auto Property and Cas. Ins. Co. v. Kincaid, 2011 WL 344086 (C.D. Ill. February 1, 2011), the U.S. District Court for the Central District of Illinois, applying Illinois law, found that a commercial general liability (CGL) insurer had a duty to defend a hair salon and a business partner over a lawsuit filed against the other business partner alleging sexual abuse of a minor who worked at the hair salon.

State Auto issued a business liability policy to “Steve Collins and Paul Kincaid DBA The Hair Clinic.” Kincaid sexually abused a minor who worked at the hair salon both at the hair salon premises and Kincaid’s residence, which Kincaid shared with Collins. Kincaid was criminally prosecuted and sentenced to prison. The abused minor filed a lawsuit against Kincaid, Collins and the hair salon alleging, among other things, that: Collins was negligent because he failed to protect the minor from Kincaid and Collins knew or should have known of Kincaid’s illegal activities; Collins participated in a fraudulent conveyance of assets designed to prevent a minor from obtaining assets previously held by Kincaid; and the hair salon was liable for negligent hiring, retaining and supervising Kincaid. Collins and the hair salon sought coverage for the minor’s lawsuit from State Auto.

Please see full article below for more information.