Boy Scouts Lose $18.5 Million Sex Abuse / Molestation Verdict

An Oregon man was awarded an $18.5 Million jury verdict against the national Boy Scouts organization for reckless and outrageous conduct in allowing an assistant scoutmaster to participate after admitting to a scout official that he had previously molested 17 other boys. Evidently the compensatory damages that were awarded amounted to $1.4 Million and the punitive damages were $17.1 Million. This verdict was only against the national Boy Scouts organization and does not include potential damages against local councils and other individual defendants. This verdict should serve as a wake up call to youth sports and recreation organizations to shore up their risk management plans. It also illustrates the need to carry high limits of General Liability coverage, including coverage for Sex Abuse & Molestation and punitive damages.

Sadler Sports & Recreation current clients can take advantage of our abuse / molestation videos on risk management implementation and awareness training as well as our word doc abuse / molestation risk management plan template. See www.sadlersports.com/riskmanagement

Source: Associated Press Release

Punitive Damages Exclusion In General Liability Insurance

The punitive damages exclusion on a General Liability policy can have a devastating effect for sports and recreation organizations such as teams, leagues, recreation departments, camps, etc. and their directors, officers, employees, and volunteers. General Liability policy forms containing this exclusion should be avoided since coverage for punitive damages is generally available in the market place.

Most of the lawsuits that arise in the sports and recreation context for participant and spectator injury ask for punitive damages in addition to regular compensatory damages. This is why the lawsuit papers use high voltage words to describe the wrongful conduct such as wanton, willful, grossly negligent, acting with reckless disregard for the safety of others, etc. Punitive dames are meant to punish the wrongdoer by making an example for others to see.

Since most lawsuits ask for punitive damages, it makes sense that coverage for such is desirable in order to reduce the worry factor.

Punitive damages may not be insurable in some states as such coverage may considered to be a violation of public policy. Various state statutory codes that limit coverage for punitive damages often distinguish between directly assessed punitive damages and vicariously assessed punitive damages. Directly assessed punitive damages are those that are awarded directly against the wrongdoer. On the other hand, vicariously assessed punitive damages are those that are assessed against a defendant that was not directly negligent but instead had liability imputed under agency principal law. For example, a corporation may be vicariously liable for the acts of its employees.

The following states have laws that limit the insurability of punitive damages that are directly assessed against the defendant: AR, CA, CO, CT, FL, IL, IN, KY, LA, ME, MA, MN, MT, NV, NJ, NY, ND, OH, OK, OR, PA, RI, TN, UT, and VA.

The following states have laws that limit the insurability of punitive damages that are vicariously assessed against the defendant: NY, OH, UT, and VA.

A number of states are currently undecided on the issue of insurability of punitive damages.

Source: John Sadler