Seeking justice: Insurance and sexual misconduct

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By Christine M. Fleming | 23 June 2014

Recently, the United Nations has made a push to classify childhood sexual abuse as torture, which among other things would eliminate time constraints within which victims can bring a civil action for redress. Claims of childhood sexual abuse have been brought in increasing numbers against schools, camps, daycare centers, universities, religious entities, and other institutional defendants. In recent years, media coverage and social awareness of this problem have reached new heights, with criminal convictions against prominent figures such as Penn State’s Jerry Sandusky pushing the issue into the spotlight.

In response to the increasing attention toward childhood sexual abuse, this article will first summarize recent initiatives by the United Nations to characterize childhood sexual abuse as torture and eliminate the statute of limitations. It will then review the insurance coverage issues related to sexual misconduct claims.1 Although specific sexual misconduct coverage is offered today, the focus of this article will be on commercial general liability (CGL) policies that may be triggered even though sexual misconduct coverage may not have been contemplated at the time the policy was issued.

Recent action by the United Nations

The United Nations has recently taken a position that childhood sexual abuse by Roman Catholic clergy could be considered torture under the United Nations Convention against Torture. The Convention against Torture is an instrument adopted by the United Nations General Assembly in 1984, requiring “State Parties” (participating countries) to prevent torture. Article 1.1 of the Convention defines “torture” as “any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person for such purposes as…intimidating or coercing him…when such pain or suffering is inflicted by…or with the acquiescence of…a person acting in an official capacity.” The United States is a signatory to that convention. The Committee against Torture monitors its implementation. Article 14 states that “Each State Party shall ensure in its legal system that the victim of an act of torture obtains redress and has an enforceable right to fair and adequate compensation.”

Classifying childhood sexual abuse as torture could serve to eliminate time limits within which victims of childhood sexual abuse may bring a civil action. It is possible that the Catholic Church could be exposed to additional litigation. Moreover, the Committee’s fresh look at sexual abuse as torture is a significant finding that elevates the issue and could result in reevaluations of accountability and prosecution of these types of claims. Presumably, classification of sexual abuse as “torture” would not apply solely to the Catholic Church, but to any institution acting in an official capacity that is found to have “acquiesced,” “instigated,” “consented,” or “inflicted” pain or suffering caused by sexual abuse.

In the wake of the U.N.’s activities with regard to allegations of childhood sexual abuse against the Catholic Church, as well as numerous other events that have elevated awareness of and focused media attention on childhood sexual abuse, it is important for insureds and insurers to review coverage issues that commonly arise with regard to CGL policies.

Sexual misconduct coverage issues related to CGL policies

CGL policies generally agree to indemnify the insured for damages from personal injury that occurred during the policy period. Typically, CGL policies did not contain sexual misconduct exclusions until the mid-1980s. Moreover, standard CGL policies do not cover intentional acts. Thus, several questions are raised: Would old CGL policies still be exposed today? Are acts related to sexual misconduct considered “occurrences”? If the abuse or injuries occurred over a long period of time, which policy responds? If the abuse or injuries occurred multiple times, how do we determine the number of occurrences? What other common CGL exclusions or definitions might raise coverage questions with respect to sexual misconduct claims?

Are old CGL policies still exposed today?

In cases of childhood sexual misconduct, the abuse often occurred many years before the lawsuit was brought or the claim was reported. This long report lag exists because states set the statute of limitations within which a plaintiff can bring a suit as the time when that person reaches the age of majority. In addition, some states have extended the statute of limitations specifically for childhood sexual abuse claims. The legislatures in these states reason that there are unusual psychological barriers impeding the victim’s ability to report these incidents, and lengthening the statute of limitations achieves a higher social purpose and promotes a just outcome. Several states allow five to 10 years after reaching the age of majority in which to file a suit, or longer. Two states have no time limitation for filing childhood sexual abuse lawsuits. Many states also have an alternate trigger allowing the plaintiff to file within a certain number of years after discovering their injuries were related to the sexual abuse. This is frequently not a clearly identifiable date.

Because of this long reporting lag, older CGL policies can and do get triggered for claims related to childhood sexual misconduct.

Are acts related to sexual misconduct considered “occurrences”?

The typical CGL policy defines an “occurrence” as an accident (including an accident that is continuous or repeated) that unexpectedly and unintentionally results in personal injury. Thus there are two tests of whether something is an occurrence: (1) is it an accident and (2) was it expected or intended. However, courts often consider these two tests as one, because an accident is something unanticipated and unintended.

CGL policies exclude coverage for criminal acts of the perpetrator because criminal acts are anticipated and intended, and are not accidents. However, coverage is not clear with respect to the alleged wrongdoing by the institutions, which usually includes negligent hiring and supervision—neither of which are criminal acts. Can allegations of negligent hiring resulting in sexual abuse be considered an accident that was unanticipated or unexpected?

The answer to this question varies depending upon the jurisdiction and the court. Many courts have decided that an event is accidental if, from the viewpoint of the insured, the insured did not intend the harmful result. Thus, the insured may have intended the action (hiring someone), but did not intend the employee to cause harm, and therefore from the insured’s perspective the harm was accidental, unanticipated, and unintended. Under this reasoning, negligent hiring would be considered an “occurrence.” The knowledge or intent of the perpetrator is not relevant to address coverage questions related to claims against the employer.

Other courts have held that hiring a sexual abuser is not an accident for purposes of applying insurance coverage.

For abuse or injuries that occurred over a long period of time, how do we determine which policy responds?

If the abuse occurred over a long period of time, and/or there is a long lag before the claim is reported, then the insured may have several CGL policies in place, any or all of which could provide coverage for the occurrence. The relevant date for determining which policies are triggered is the date the damage occurred, not the date of the conduct that led to the damage. In the case of sexual misconduct, it is the date the injury occurred, not the date of the negligent hiring or supervision, that determines the policies triggered.

However, because of the repeated and continuous nature of many sexual abuse cases, it is difficult to determine the date on which the injury actually occurred. Therefore, most courts have held that all policies in effect during the period of actual abuse are triggered. This theory is known as the “exposure” trigger of coverage. Some courts, however, have held that the injury progresses even after the abuse ends—specifically, until the date the plaintiff discovers his or her abuse-related injury (i.e., when the injury becomes “manifest”). In these jurisdictions, all policies in effect during the period of actual abuse and thereafter until the date the injuries are discovered are triggered. This theory is known as the “continuous” trigger of coverage.

The fact that many policies may be triggered does not mean that all triggered policies will pay the same amount of indemnity or defense. Generally, there are two methods courts use to allocate damages among the triggered policies: pro rata and all sums.

Under the pro rata approach, losses are divided among all triggered policies. The courts applying pro rata allocation reason that this approach is consistent with the CGL policy; namely, that a policy pays only for damages occurring during that policy period. Of course, in cases of injuries sustained as a result of continuous or repeated sexual molestation, it is impossible to determine what quantity of the damage occurred during each policy period. Therefore, courts usually allocate pro rata based upon an insurer’s share of the time on the risk or some variant thereof (e.g., some states allocate pro rata based upon a combination of time and limits on the risk). In most cases, the insured’s own self-insured retentions in triggered years are also allocated a share of the exposure.

The all sums method also finds support in the CGL policy language; namely, that the insurer is required to pay “all sums” the insured is legally obligated to pay as damages resulting from an occurrence. Under the all sums approach, all losses are allocated to one policy period and losses are paid off of those policies up to the coverage limits. In short, insurers are jointly and severally liable for the entire amount of the claim. The insurers within that policy period may then pursue other carriers for contribution. In many cases, the insured’s self-insured retentions in years other than the allocated policy period do not contribute to the losses. In some cases, the insured can select the policy period within which losses will be allocated.

If the abuse or injuries occurred multiple times, how can we determine the number of occurrences?

“Occurrence” is generally defined to include continuous or repeated exposure to the same harmful conditions. In the case of sexual abuse the number of occurrences is not always clear, and indeed determining the number of occurrences does vary from jurisdiction to jurisdiction.

Most states determine the number of occurrences by examining the cause of the injuries. However, it is difficult to determine the cause of the injuries, which is due to several factors: sexual abuse cases involve allegations of negligent hiring or supervision; there are often several different victims of one perpetrator, or several different perpetrators; and, finally, sexual abuse is often repeated and continuing across multiple policy periods.

In this complex context, how does the court determine the cause(s) of the injuries in order to determine the number of occurrences? The answer is that these determinations vary from court to court. Some courts have held that each victim of one perpetrator is a separate occurrence, regardless of the number of years involved. Other courts have held that each perpetrator constitutes a separate occurrence, regardless of the number of victims. Still other courts have found that there is a separate occurrence for each victim in each policy year where abuse occurred.

The question of number of occurrences in the applicable jurisdiction is important because the answer will determine the number of self-insured retentions that will apply. Thus, insureds tend to prefer a finding of one occurrence. Although a finding of multiple occurrences means the application of more than one per occurrence policy limit, the existence of aggregate limits caps the insurer’s exposure in multiple-occurrence situations. For this reason, insurers tend to prefer the application of multiple occurrences that would lead to application of many self-insured retentions.

What other common exclusions or definitions might raise coverage questions?

As discussed above, a key coverage question raised by the typical CGL policy is whether there has been an “occurrence”—an accident that was unexpected and unintentional (at least, from the standpoint of the insured).

The unexpected and unintentional CGL policy language is also frequently raised to deny coverage in sexual abuse claims alleging negligent hiring and supervision for another reason. In order to find liability against the insured, the insured must have known or reasonably should have known about the abuser at the time of hiring or supervision. In other words, if an insured is found liable, that means that the insured knew or should have known that it was hiring/supervising a sexual abuser. Is the fact that the insured “should have known” equivalent to a finding of “expected or intended” from the standpoint of the insured? Generally, the answer is no. That the insured “should have known” is not in and of itself enough to preclude coverage based on the expected or intended language. Typically, a more direct connection needs to be made between the insured’s hiring/supervising and the employee’s sexual misconduct (e.g., ignoring criminal records, facilitating the misconduct).


Childhood sexual abuse continues to receive heightened attention, and with the United Nations committee hearings involving the Catholic Church it is prudent for potential institutional defendants and their insurers to reevaluate liability defenses as well as coverage terms and conditions. Although in recent years, insurance coverage specific to sexual molestation has been offered, the older CGL occurrence policies without sexual misconduct exclusions continue to be exposed. Moreover, with the erosion of statutes of limitations for bringing sexual abuse lawsuits, claims potentially covered by these CGL policies will continue to be reported. Monitoring issues and events involving sexual abuse and ascertaining coverage related to sexual misconduct claims will continue to be an essential part of risk management plans of insurers and insureds.

1This article summarizes typical case law and statutory law as applied to standard CGL policies in commonly encountered situations. The reader is cautioned that each U.S. state has its own statutory and common law regarding insurance coverage, statutes of limitations, and other issues related to sexual misconduct claims. Moreover, policy language varies. Careful research into a particular state’s statutory and case law and reading of applicable policy language are required to make any case-specific determinations.