Sex Abuse/Molestation Coverage

Understanding the coverage all youth sports organizations need

Lawsuits alleging sex abuse/molestation have rocked the sports and recreation insurance industry in recent year. Fears are growing that the heightened media coverage of high profile cases like the Sandusky case could open the floodgates for more litigation in the future. Sports and recreation organizations and related sanctioning/governing bodies need to stay on top of this issue.

When there is an incident of sex abuse/molestation within a sports or recreation organization, it’s not just the alleged abuser who is likely to be sued. The entire board of directors and the officers are likely to be sued for failure to screen the offending staff member or volunteer and failure to implement a specific risk management program to protect the children against child predators.

Is your organizations covered?

A General LiabilityCriminal background check policy may cover allegations of sex abuse/molestation as long as there is no specific Abuse/Molestation exclusion. Coverage under such situations is not guaranteed and will depend on state case law and the exact nature of the allegations. However, most carriers that insure sports organization are likely to insert an exclusion for sex abuse/molestation.

Some carriers offer a buy-back with a specific limit for sex abuse/molestation via a special endorsement in order to clarify that coverage exists. This removes all doubts regarding coverage. When a specific limit is offered, it is usually in the form of a per claim limit and a separate aggregate limit.

Carriers that offer this coverage use specific language to place a cap on their overall exposure. This is due to fears generated by some courts having ruled that each abuse/molestation incident is a new occurrence and that successive policies can be stacked on top of each other to multiply the total aggregate limits. In addition, it’s common knowledge that most abusers/molesters have multiple victims. Furthermore, specific wording may be added to exclude coverage for the perpetrator and for other directors or officers who remained silent and did not take action despite knowledge of an incident.

Who in the organization is covered?

It is also common to see a single master General Liability policy with a Sex Abuse/Molestation limit covering an entire sports association or sanctioning body and its member teams/leagues under a single Sex Abuse/Molestation Aggregate limit. This is dangerous since those filing claims later in the policy year may find that they have no General Aggregate limits left to pay their claims. Sports organizations should attempt to negotiate reinstatement of the Sex Abuse/Molestation aggregate on a per league or per team basis.

Coverage for sex abuse/molestation can be difficult to negotiate with the carriers unless the sports organization can prove that it has implemented certain controls such as mandatory criminal background checks on all adults with access to youth, mandatory staff and parent education, policies and procedures to make an incident less likely to occur (ex: prohibition of sleepovers, no single adult to be alone with a single child, etc.), and mandatory reporting of occurrences to board and police.

For more information on this topic, our risk management library has articles, protection programs, and training videos.