War Breaks Out Over Insurance Coverage for Sex Abuse Claims

For decades, insurance companies have defended and indemnified their policyholders against claims of institutional liability in cases involving alleged sexual abuse and molestation — because such claims are clearly covered by standard general liability and potentially other policies as well. However, this may now be changing. Three cases filed this summer indicate that denials of such claims are becoming more common, and coverage litigation may now be inevitable when a policyholder makes a claim for sex abuse coverage against its insurance companies

This upsurge in coverage litigation appears to be triggered in part by sex abuse claims permitted by new state laws enlarging and even temporarily eliminating the statute of limitations for such claims. Two of the coverage complaints were filed in New York, and both concern coverage for claims asserted pursuant to the one-year window to file otherwise untimely claims contained in the Child Victims Act signed by Gov. Andrew Cuomo this past February.