Commercial Liability Insurance for Abuse/Molestation – What You Need To Know!
Tricia Rawlins, Marketing & Carrier Relations Leader
Most people know that insurance coverage, terms and conditions can vary greatly from one insurer to another. How many of those people actually get “into the weeds” and read their insurance contracts though? Not very many of them. Instead, they typically shop by price and/or rely on their broker to provide them with adequate coverage.
Well, guess what? Not all brokers are created equal either! At Brown & Brown, we get “into the weeds”, read coverage forms and provide our commercial customers with accurate coverage comparisons. With that said, there is an emerging trend in the world of sexual abuse/molestation coverage that could adversely affect those that have or need the coverage, which typically includes non-profits, schools, and healthcare-related risks to name a few.
Many insurance companies who offer this coverage have already or are restricting coverage by defining:
“Each, every and all actual, threatened or alleged acts … “ as a single “abuse” or “molestation” regardless of:
- The number of injured parties;
- The period of time or policy periods over which the acts took place; and
- The number of such actual, threatened or alleged acts.
Whoa! In a nutshell, if one of your employees commits 11 acts of abuse or molestation over the course of several years, that is ONE abuse claim! How far do you think that $1,000,000 limit will actually go if there are 11 claimants? Higher limits are available, but this is typically what we see in smaller organizations. Keep in mind that the limit is often inclusive of defense coverage as well!
This is by far the biggest restriction and difference, but the good news is there are still insurance companies offering coverage wherein each victim is a single claim and we represent many of them. Some of the other terms and conditions to pay attention to include the actual definitions of “abuse” and “molestation”, the coverage trigger, and is the form “duty to defend”? If not a “duty to defend” form you have essentially forfeited all rights to defense costs. If a suit arises, it may not result in a judgment, but there will always be defense costs!
In summary, sexual abuse and molestation claims have continued to rise over the years. The number of claims and amounts of the judgments has led to some coverage restrictions making it all the more important for you to do business with an insurance broker like Brown & Brown who truly gets “into the weeds”.