Obtaining coverage for allegations of sexual abuse and molestation liability has become increasingly challenging in recent years. Allegations and litigation have risen significantly, alongside new gaps and new exclusions in traditional insurance policies. Moreover, there have been many nuclear verdicts and highly publicized nine-figure settlements for claims in this area. The market reaction has been for many insurers to shift away from a position of “silent” policy wording, to adding outright exclusions or sub-limits for claims related to sexual abuse and molestation.

Legislative and Legal Influences

Recent legislative changes in 25 states fuel the rise in abuse and molestation allegations and claims. Many states are revising their statute of limitation laws for both criminal and civil sexual abuse claims, either extending limitation periods or creating temporary windows for past civil claims. For example, California’s Bill 2777, also known as the Sexual Abuse and Cover-Up Accountability Act, extended the statute of limitations from two years to ten years. The law’s retroactive provision has prompted a notable uptick in revived claims, particularly against institutions like hospitals, university medical centers and clinics. Many of these claims involve incidents over a decade ago, making it difficult for healthcare institutions to locate records or key witnesses.

Hardening Market

The insurance market for this risk is hardening, leaving insureds with rising premiums, reduced limits and, in some cases, outright exclusions. While general liability policies may have once provided sufficient protection, they are increasingly considered inadequate in today’s climate.

Insurance carriers are continuously adding new exclusions and redefining policy language, making coverage for sexual abuse and molestation allegations more complex. Courts have had to rule on terms such as “abuse,” “care,” “actual vs. threatened,” and “physical vs. non-physical” under previous policies. The expansion of exclusions is re-shaping what a standard general liability policy will and will not cover.

However, from every crisis, innovation and opportunities emerge. To address gaps and ensure coverage certainty, some carriers now offer standalone sexual abuse and molestation liability policies to address this evolving risk.

Underwriting and Coverage Trends

Carriers are now closely scrutinizing insureds’ risk management practices, requiring detailed reviews of their current sexual abuse policies, procedures, screening, training, incident reporting, investigation processes and incident prevention efforts.

Policy language continues to evolve, expanding and broadening exclusions of coverage. Standalone policies are shifting to a more proactive and response-oriented approach beyond traditional insurance coverage to fill the market needs. Some carriers now offer additional services, including:

• Discounted background check services
• Screening and selection consultation
• Employee abuse awareness training
• Response and reputation protection
• Expert consultation on incident response

Securing adequate sexual abuse and molestation liability coverage has become increasingly complex. Rising allegations, evolving legislation and shifting underwriting standards make it difficult for organizations to navigate coverage gaps and compliance requirements on their own. Traditional general liability policies are often insufficient, and standalone policies demand a deep understanding of exclusions, definitions and risk management best practices.

Working with a professional consultant is essential for organizations seeking to protect themselves in this challenging landscape. With carriers tightening requirements, having a knowledgeable consultant by your side can make all the difference in securing tailored protection and mitigating future liabilities. In an era of heightened scrutiny and shifting legal frameworks, seasoned guidance is not just valuable, it’s necessary.

Brian Lewandowski

VP, Healthcare Liability Broker