Risk management

​​Physical abuse and sexual molestation liability

Abuse and Molestation Insurance as an endorsement to the Commercial General Liability policy in a form and with coverage that are satisfactory to the State covering damages arising out of actual or threatened physical abuse, mental injury, sexual molestation, negligent: hiring, employment, supervision, investigation, reporting to proper authorities, and retention of any person for whom the Contractor is responsible including but not limited to Contractor and Contractor’s employees and volunteers. Policy endorsement’s definition of an insured shall include the Contractor, and the Contractor’s employees and volunteers. Coverage shall be written on an occurrence basis in an amount of not less than $________________ per occurrence. Any annual aggregate limit shall not be less than $______________________. These limits shall be exclusive to this required coverage. Incidents related to or arising out of physical abuse, mental injury, or sexual molestation, whether committed by one or more individuals, and irrespective of the number of incidents or injuries or the time period or area over which the incidents or injuries occur, shall be treated as a separate occurrence for each victim. Coverage shall include the cost of defense and the cost of defense shall be provided outside the coverage limit.​

  • Use when contracting for services that will involve a contractor having any kind of custodial care over a client of the state (client meaning someone in the care, custody, control of the state​).

  • Examples of services contracted with where this coverage should be considered includes, but is not limited to: Day care services, assisted living facilities, long term care and/or skilled nursing facilities, training centers, group homes (that are contracted with), etc​.

Contracting for a services is different than a state agency certifying or licensing a facility. This coverage applies when a state agency is contracting for services​​.

  • Physical abuse, and sexual molestation insurance is insurance coverage that protects against losses related to lawsuits arising from claims of physical and/or sexual abuse. This abuse can include molestation, physical blows, inappropriate touching, mental injury and more. A company, non-profit, or other organization may be sued for physical and/or sexual abuse allegedly enacted by an employee, volunteer, or other associated personnel. Certain businesses at a higher risk of fielding such lawsuits often purchase such a policy.

  • Coverage should be requested to include damages due to negligent hiring, employment, supervision, investigation, reporting to proper authorities (failure to report), and retention of any person for whom the Contractor is legally responsible which may include but is not limited to: the Contractor, Contractor’s employees, volunteers, board members and staff.  ​

  • This insurance also covers cost of defending against claims of physical abuse and sexual molestation, which can be very expensive.  Even claims without merit can result in high defense cost. This policy can help policyholders shoulder the cost of such claims and lawsuits.

  • Coverage is provided as an endorsement to the Commercial General Liability policy. It is important to require separate and dedicated dollar limits for this coverage.

  • Defense cost should be provided outside the coverage limit so it does not erode coverage available for claim settlements.

  • Due to a potentially long lapse of time between the alleged incident and when the incident is reported, it is important for coverage to be on an occurrence bases, rather than on a claims made basis. This means if the alleged incident occurred when a policy was in place, then coverage will be available regardless of when the incident is reported (though legal statutes of limitations may apply).

  • Contractors susceptible to claims of this nature should consider implementing and following sound policies and procedures regarding: hiring/screening/back ground checks; preventative measures for avoiding potential misconduct; supervision/monitoring of employees; investigation and reporting procedures of any alleged incident.

  • $1,000,000 of coverage per occurrence with an aggregate limit of no less than $3,000,000 is a common and available level of coverage. Additional coverage can be added up to, for example, $3,000,000 or $5,000,000 per occurrence, by adding an umbrella policy providing the same coverage as the underlying abuse and molestation insurance.

  • Assess the risks of the particular contract to determine appropriate insurance limits and risk control measures.

  • Ask questions such as, but not limited to:

    • Does the contractor have and follow sound policies and procedures regarding: hiring/screening/back ground checks; preventative measures for avoiding potential misconduct; supervision/monitoring of employees; investigation and reporting procedures of any alleged incident?.

    • Will such (or similar) requirements be included in the contract?

    • How long has the contractor been in business? How much experience do they have?

    • Do they currently carry such insurance?

    • Do they have a history of such claims being made against them​?