Wording in an insurance policy that confers "insured" status upon spouses
of "insureds" under that policy. Such coverage is necessary because, often,
when confronted by a claim, insureds transfer assets to a spouse as a means
of protecting such assets in the event of an unfavorable outcome in a lawsuit
pending against them. However, in recent years, plaintiffs' attorneys have recognized
such tactics and often respond by also naming spouses in lawsuits. Spousal coverage
extensions state that the policy applies only when a claim is made against a
spouse because of either spousal status or spousal ownership in specific assets.
However, coverage does not apply to the direct acts of a spouse in causing a
claim. For example, there would be no coverage for an employee's husband (who
is not also an employee of the insured organization) if he were accused of sexual
harassment that allegedly took place at a company picnic hosted by his wife's
(the employee's) company.
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