However, because of the way California discrimination statutes are written and interpreted, there are ways for insurance companies to insure these acts. One of the largest concerns for employers facing employment discrimination and harassment cases is the cost of hiring attorneys to defend the cases. Defense of these cases can run into the tens and even hundreds of thousands of dollars. Recognizing this, some insurance companies in the early 1980s began writing insurance to cover these costs only. They didn't insure the liability for the discrimination itself, but they did write policies covering the legal bills incurred as a result of a discrimination suit.
Defense is simply the cost for lawyers to defend the case.
This kind of coverage is still available. The Origins of Discrimination Indemnity. Around 1992 or 1993, the Insurance Commissioner of the State of New York issued an opinion that it was permissible for insurers to offer liability insurance for some types of discrimination cases. Vicarious liability means that if an employee does some harm to another, and does it in the scope of his employment, the employer is liable. This theory of liability was not created in the discrimination context.